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Is it their say though? It's not a lease, once someone else owns it they can do what they want with it.
For a fun example to talk about look at Deadmau5's Purrari.
The Nyan cat wrapped Ferrari.
Legally Ferrari had little they could do. There was some things to do with putting a modified badge they could stop. While on finance they could recall the loan due to the modifications affecting the equity in the car.
But any seller of any product has the backstop that they can ban further purchases and refuse future services. Or even potentially be required to buy their home nation.
Why would Nitrogen gas suppliers not want this?
As a global company, do you want to risk losing a major market by supplying a product for executions.
If you sell your product for executions you are officially selling a poison.
Do you want the regulation involved to have to background check every customer to ensure they are not using it for lethal purposes?
Do you want the additional import and export controls on your product?
Are you held liable in any way if someone deliberately uses your product for euthanasia or suicide? Potentially. That's why several countries have limits on the volume of paracetamol an individual can purchase.
The Terms of Service is a sticking plaster, probably not even enforceable, but the bare minimum to avoid further regulations on the industry. But it's certainly worth nitrogen gas suppliers trying to avoid themselves being dragged into a hornets nest of politics, morality, and costly regulation.
Banning a small customer, in prisons, from buying your product could save you a lot of money in the long run.
Only for direct sales. Prisons could still just go buy through an intermediary, unless the first party sale contract also forbids that. Even then, it's questionably not enforceable. It'd be like me selling my car, but doing so with a contract stipulating that the buyer can't re-sell the car to someone that may use it for a particular (and legal) purpose.
But they can put in efforts and contracts to prevent it.
What will happen if these states violate these contracts? The companies will sue them in the very same courts that ruled the death penalties?