Incandescent light bulbs were never illegal to sell in the US. They were illegal to manufacture after 2007 if they did not meet efficiency requirement. Tungsten-filament incandescent bulbs do not meet those requirement and so were banned. They were, however, available for sale until stock ran out.
The show takes place in Denver, yet during one of the establishing shots showing the exterior of the hardware store Mike Baxter is visiting signs saying "NYC" are clearly visible establishing that the scene was shot in New York.