How Illegal Cigarettes Get Smuggled and Sold in New York City

I spent a day with a guy who traffics &#34;loosies&#34; in Staten Island.

by Solange Uwimana
Oct 23 2014, 7:00pm

High cigarette taxes in New York City feed the black market on the street. Photo via Flickr user David Tan

Editor's note: We're republishing this piece in light of the recent episode of Black Market: Dispatches about illegal cigarette smuggling in the Ukraine. You can catch Black Market: Dispatches on VICELAND. Find out how to watch here.

It's a cloudy and cool September morning on Staten Island when I make my way to Bay Street looking for someone to sell me illegal cigarettes. I don't smoke, but ever since Eric Garner's haunting death here a few months ago after the police approached him for selling "loosies"-individual, untaxed cigarettes-I've wanted to know how easy it is to find someone who will sell me illegal smokes on the street.

As I walk into a bodega across from Tompkinsville Park, which sits a couple of blocks from the Staten Island Ferry terminal, a tall, dark-skinned man overhears my conversation with the owner and offers me a pack of "Newps," or Newports, for eight dollars. He tells me his name is Debo Lato. He's 51 and his "office" is just outside the bodega, right in front of the spot where Garner was killed on July 17.

A makeshift memorial-candles, cards, and flowers-still rests on the spot where Garner, a six-foot-three, 350-pound African American father of six, was placed in an illegal chokehold and held down by NYPD officers until he stopped breathing. Selling loosies was a crime he'd repeatedly been busted for in the past. Garner's death, which was ruled a homicide, sparked weeks of high-profile protests against NYPD brutality. A special grand jury took up the case this month and will determine-eventually-if criminal charges should be brought. But how profitable is it to sell cigarettes on the street, and who's still got the guts to do it?

Lato is unhurried and nonchalant as he sells Newps to a dozen or so people on the street in the hour we stand there talking. Newport was the second-best selling brand of cigarettes nationwide behind Marlboro in 2013. It's also the only brand Lato is selling this morning.

Photo via Flickr user Steve Snodgrass

It's illegal, but Lato isn't hiding what he's doing, nor is he furtive as he pockets dollar after dollar. After all, there are no uniformed police officers in sight.

He pays a mere $50 for one carton, each of which contains ten packs, and claims to sell anywhere from six to ten cartons a day. That adds up to at least $480 in gross sales-not counting what he makes from selling loosies one or two at a time.

"Everybody on Staten know that Bay Street right here is the market for cigarettes," he tells me. "Everybody on Staten Island know if you want to pay $8 for a pack of cigarettes, go to Bay Street. Any place else is $9 and better."

That's an amazing deal in a town where the average price of a pack of smokes is somewhere around $13. I've seen them listed for as low as $11 in Harlem and as high as $15 in Midtown. Those prices include the state excise tax of $4.35, as well as the city's local tax of $1.50. That makes New York the most expensive state in which to buy cigarettes.

That hasn't stopped New Yorkers from choking down cancer sticks. The Centers for Disease Control and Prevention estimates that black males between 18 and 24 years old are the demographic group most prone to smoking in the state. The majority of New York smokers also don't have a high school degree. Staten Island is the borough with the highest percentage of smokers in New York City at 16.5, the majority of them black and Hispanic males, a 2012 survey by the NYC Department of Health and Mental Hygiene reported.

Staten Island also was home to the highest percentage of smokers a decade ago, at 27.2 percent-when a pack of cigarettes in New York City cost about $6. The sharp decline helps explain why researchers often conclude that high tobacco taxes push people to quit smoking. In a widely cited 2012 article published in Tobacco Control, a British journal that studies the nature and consequences of tobacco use, a trio of experts analyzed more than 100 studies and concluded, "Tobacco excise taxes are a powerful tool for reducing tobacco use while at the same time providing a reliable source of government revenues."

But is that really what's happening? It is true that there are fewer smokers in the city today than there were in years past-that downward trend is reflected nationwide. But in New York, it's hardly clear those taxes are what spurred the decline. The smoking rate in Staten Island has dropped just 4 percent since 2007, though the cigarette tax has been raised twice in the meantime, by $1.25 a pack in 2008 and by $1.60 a pack in 2010. According to these studies, the decrease since then should have been precipitous. Instead, the most significant effect seems to be a rise in street sales.

Nearly 57 percent of cigarettes bought in New York are smuggled into the state-the highest percentage nationwide-according the Tax Foundation, a nonpartisan Washington, DC, think tank that has ties to the controversial American Legislative Exchange Council (ALEC) and advocates for a simpler tax system. The foundation based its conclusions on figures from the Mackinac Center for Public Policy, a right-wing research firm funded by tobacco companies.

"One consequence of high state cigarette tax rates has been increased smuggling as criminals procure discounted packs from low-tax states to sell in high-tax states," the report reads. "Growing cigarette tax differentials have made cigarette smuggling both a national problem and a lucrative criminal enterprise."

A vintage Lucky Strike billboard near Chapel Hill, North Carolina. Photo via Flickr user Bruce Henschel

"I just came from North Carolina the other day," Lato says when I ask him where he gets his cigarettes. "You know how much cigarettes cost out there? Five dollars."

According to a survey by the the Awl, a pack of Marlboro Reds costs an average of $5.45 in North Carolina, one of the lowest prices in the nation. It's also just a quick ten-hour drive down I-95 from New York City.

"I just run out there maybe twice a month," Lato says. But he's not as cavalier on these trips as he appears on the street.

"Let me tell you something," he continues, "Number one: You cannot just go out there and just go into one store and buy it like that 'cause they know. When you go out of town, you buy cigarettes, you buy too many cartons, they suspicious. You gotta go in this store and buy two or three cartons, this store, buy two or three cartons, that store, buy two or three cartons. You got to do it like that. You can't go into one store and buy more because they know that we're taking them out of state."

Upali Dunaratne, the owner of the bodega in front of which Lato does his thing, has a more straightforward supply line, but a harder time moving product. Cartons costs Dunaratne about $110 when he picks up his shipments in Brooklyn. He sells only about three cartons every two days, however, and a pack of Newports in his 300-square foot store, which stocks the standard fare of snack foods, drinks, and household items, costs $12.25. The shopkeeper says his profit is just $10 to $12 off cigarette sales in any given week.

"People who cannot afford it at this price buy it outside [from Lato] for a cheaper price," Dunaratne says. "People who work, make living, they pay that [higher] price. I'm not gonna stop selling cigarettes. I still get some customers."

Kelly Cooke, 45, has been smoking since she was 13 years old. Both her parents smoked. So did her brother and sisters. Her twin brother is the only one in the family who shunned cigarettes.

"I used to smoke four packs a day," she tells me on her way to work after I approach her in a deli on Bay Street. She's now down to a pack and a half. I ask her how much money she spends on her habit.

"Oh my God! Forget it," she replies. "Maybe $26 a day-every day. If I go to Brooklyn, it costs me $18 for two packs."

When I saw her, she was haggling with George Reyes, the deli manager, to let her pay for her coffee at the end of the day.

"That's why he gives me the coffee until I get off of work later, 'cause I don't have a dime before work," she says. This is why she buys loosies on the street. I ask her how easy it is to get them.

"It's not easy," she replies. "Nothing's easy. They have to know you there. This is their neighborhood, their area. I work around here."

She tells me she's going to keep smoking "until my brain goes backward and I come to my senses."

Low-income smokers now spend nearly a quarter of their income on cigarettes because of high taxes, according to one 2012 study. The study concluded that these taxes had no significant effect on their smoking habit and that, in fact, smokers with annual incomes less than $30,000 doubled their spending on cigarettes between 2003 and 2011.

More affluent smokers, on the other hand, have found that buying cigarettes on the street is a way to keep smoking without, well, really smoking. A friend refers to her habit as the "loosie-a-day smoking plan." She no longer smokes a pack a day, but still buys one to two cigarettes per day for high-stress situations.

Protesters march after Eric Garner's death on Staten Island in August. Photo via Flickr user coolloud

Some people do have a problem with black-market smoke dealers like Lato, however. The New York Daily News reported in August that in the days and weeks leading up to Eric Garner's death, the city had received numerous 311 calls complaining about the sale of untaxed cigarettes on Bay Street. In an interview with WNYC in August, NYPD Commissioner Bill Bratton addressed these quality of life calls.

"If we were to stop responding to 911 emergency or 311 quality of life calls, there would be a phenomenal hew and cry that we were neglecting the minorities of the city," he said. "For many minorities, the neighborhoods they live in, some of the circumstances they find themselves incumbent with in their neighborhoods unfortunately... They want something done about that."

Lato admits he's been harassed by police officers, but shrugs that sort of thing off.

"So? So?" he asks. "They're gonna kill all of us for a fuckin' Newport? Well, get to killing, man! 'Cause it's not gonna stop. You understand? We just selling cigarettes. We're not selling no crack. We're not selling no heroin. We're not selling no nothing-just only cigarettes."

Solange Uwimana is a student at Columbia University's Graduate School of Journalism. Follow her on Twitter.