Butt bootleggers purchase cigarettes in bulk at discount stores in Virginia and Maryland, where they cost about half the price. The butts are then transported up the Atlantic Coast to the city, where they are sold to bodegas and candy stores at a slight discount. The consumer rarely gets a price break, though. Such tremendous profit margin is going to invite organized crime into that fold. The tax-avoidance game is not restricted to smugglers.
Many smokers buy cartons in other states or at Indian reservations.
It's all legal, as long as the cigarettes are not resold. Others buy their smokes on Internet sites. Visitors from up north load up at places like Costco and Sam's Club. The bureau created the Alcohol and Tobacco Diversion Branch two years ago to coordinate state and federal enforcement because agents saw an upsurge in bootlegging. The bureau is conducting several tobacco diversion investigations in New York City and the metro area, said spokesman Joseph Green.