Tuesday, April 5, 2011

Battling Cigarette Taxes by Selling 'Loosies' on the Streets of NYC

The super high taxes on cigarettes in NY has spawned a black market in cigarettes. NYT explains:
By 8:30 a.m., amid the procession of sleepy-eyed office workers and addicts from the nearby methadone clinic, Lonnie Loosie plants himself in the middle of the sidewalk on Eighth Avenue in Midtown. Addressing no one in particular, he calls out his one-size-fits-all greeting: “Newports, Newports, packs and loosies.”

Rarely does a minute go by without a customer stopping just long enough to pass a dollar bill to Lonnie Loosie, known to the police by his given name, Lonnie Warner, 50. They clench the two “loosies” — as single cigarettes are called — that he thrusts back in return.

Soon Mr. Warner’s two partners, both younger men, arrive for the day and fan out along the same block. By midmorning, the block to the south is occupied by Carlton, who sells loosies, as does Carlton’s younger brother, Norman, 54.

A few blocks north, another man sells cigarettes near a check-cashing storefront. Add to these a few roving vendors who poach territory when they can.

Itinerant cigarette vendors have long been a fixture in some parts of the city, like bodegas that sell individual cigarettes in violation of state law. But with cigarette prices up and the number of smoke-friendly places down, the black market for loosies is now thriving on the streets...

there have been successive rounds of taxes — the most recent one, a $1.60 rise in the state tax in July — that raised the price of a pack of cigarettes to $12.50 at many Midtown newsstands.

“The tax went up, and we started selling 10 times as much,” Mr. Warner said. “Bloomberg thinks he’s stopping people from smoking. He’s just turning them onto loosies.”...

Mr. Warner said he believed that the official price was above what many people were willing or able to pay. As evidence, he noted that his customers included office workers from as far south as 32nd Street and as far north as 40th Street — people with good-paying jobs, as far as he can discern.

Mr. Warner said he bought his cigarettes — almost always Newports — for a bit over $50 a carton from smugglers who get them in states like Virginia, where the state tax is well under a dollar a pack. He then resells them for 75 cents each, two for $1 or $8 for a pack ($7 for friends).

Mr. Warner said he and each of his two partners took home $120 to $150 a day, profit made from selling about 2,000 cigarettes, mostly two at a time. Each transaction is a misdemeanor offense....

Among all of Midtown’s cigarette vendors, Mr. Warner stands out, partly because he seems to get arrested more frequently than others. That may be because his style of salesmanship is hardly furtive.

“The cops call me a fish — that’s my nickname, cause I’m easy to catch,” Mr. Warner said during a series of recent interviews. “When they need a body to arrest, they come pick me up.”

In the four years since he began selling cigarettes, Mr. Warner recalls being arrested 15 times, generally on the charge of selling untaxed tobacco. He has been arrested so often that he can recognize 10 different plainclothes police officers, he claims. The ever-present risk of arrest makes working with partners valuable — “we have six eyes on this block,” he explained....

For Mr. Warner, punishment usually means a few days in jail on Rikers Island, or a week of community service, some of it spent sweeping cigarette butts...

 For the moment, business is good enough that Mr. Warner said he intended to buy health insurance for the first time. He currently relies on his periodic stays on Rikers Island — an occupational hazard — for medical attention. “When they screen me, I ask for all the blood tests,” he said.


  1. I love this story. There's so much irony I don't know where to start.

    Government creates a black market by overtaxing a legitimate product that people want and an enterprising man sees an opportunity and sells individual cigarettes with the hope that he can buy health insurance to cover the runaway costs of healthcare caused by government intervention, only it turns out he doesn't really need health insurance because the law prohibiting him from selling cigarettes causes (read "allows") him to be temporarily sent to a government jail where he gets all the health care he needs (plus 3 squares a day).

    Everybody's happy, right? The state gets an enormous amount of income from "legitimate cigarette sales;" the black market customer feels like he's getting a nice discount; the fish makes a nice profit without much work and free health care; the cops have a usual suspect that they can drag in whenever they need to show that they're cleaning up the city of criminals; and the jail doctor has another patient so he stays busy on the government payroll. All this societal benefit and nobody had to produce a darn thing!!!!! Heck, this is even better than a broken window. Who says tax hike aren't good for the economy?

    America: What a country!

  2. Not going to be long now before people start getting killed over cigarettes, just as they are with weed, coke and other illegal narcotics.

  3. Next, you'll see alcohol get hit. They already banned transfats, NY wants to limit salt put in restaurant food, etc. I never thought I'd see the day when Prohibition, essentially, would come back. With a vengeance.

    However, like Prohibition, the average U.S. citizen will eventually catch on and these insipid, PC rules will get thrown out. I just hope we don't have a New Mob spring up before it happens.

  4. If the people of New York City re-elect Bloomberg it will confirm that they have no discernible intelligence what so ever.

  5. @M - I believe we residents of the great New York City have conclusively demonstrated that for several decades now

  6. Wow, that is an amazing story. Never in a million years did I think America would be like this back when cigarettes were 90 Cents a pack. Things have gone seriously sideways and counter-clockwise.