Fences and hedges behave like solid walls in that they stop the smoke grenade's cloud from expanding. This makes no sense, not to mention being inconvenient.
This didn't happen in DOS - I just retested right now, just to be sure I wasn't going crazy.
(I wonder how flares are affected? I never play night missions, aside from Cydonia, and Martians obviously haven't been growing hedges there. But I do wonder.)