It is allowed, and some companies have based their business around it.

For that matter, I've received written correspondence from people while doing genealogical research with the return address listed as "Mobile, Alabama, Occupied CSA". There are definitely cultural norms that come into play here, but in that particular case - it was from an officer of a chapter of the Sons of Confederate Veterans and contained photocopies of Confederate military records - I was amused by it. I kept the envelope and included it in my own archives.