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This is an increasingly popular move. Even if the word 'homeless' isn't in the article, this is how some cities are choosing to deal with their homeless problems. Several other cities have imposed bans on malt liquor and single beer sales. Don't remember which, but I think I remember Seattle, Denver, and Houston. The cigars I didn't know about. Seems like yeah, they're probably less important in the day-to-day life of a homeless person than the booze is.
box: I work with a couple of guys who smoke un-altered Swishers. I don't know what they do with them at home, but at work they're straight out of the package.
As for the article itself,it's an easy way for the state to raise money from people who A) are pretty close to entirely powerless, and B) are gonna buy the taxed items anyway. As the one guy said, you gotta do what you gotta do.
The demographic buying cigarillos and malt liquor is, generally speaking, poor/working class. (A point that may or may not be germane: in my own experience, they're often African-American as well. Perhaps this is different in New York.) If the state were to attempt a tax increase of that scale on items used by the middle class (or, god forbid, the upper class), they'd never be able to get away with it. People would scream bloody murder, and the parties responsible would kiss off any hope they had of being re-elected. The poor generally don't participate in the process, so there aren't the repercussions for the politicians.
(Yes, these are some really sweeping generalities I'm using. By no means is what I'm saying meant to apply across the board.)
The upshot is that the guy whose favorite relaxation technique is a forty of Old English and a Swisher is paying a proportionally much higher tax than the executive sipping his 40-year-old scotch and puffing away merrily on a Dominican corona.
On preview: yeah, Seattle has a no-fortified-alcohol zone around Pioneer Square. Washington State has some of the most ridiculous highest taxes on alcohol and tobacco, too. They push them as "sin taxes", which makes it an easier sell to the sort of people who are trying their best to legislate us into Nerf World.