Using deactivate function of ArcGIS Python Add-in Tool?
I found the answer here:
deactivate() is not a function that's intended for you (the programmer) to leverage. It's a function leveraged by the application so that ESRI tools can deactive it when they are selected. Otherwise, you'd never be able to select another tool.
In order to do what you're trying to do, you'd also need some sort of activate() function in order to default back to another tool like the cursor or pan tool because one tool always has to be active. Currently, there is no programmatic way to switch between tools that I know of.