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Almost certainly illegal. You're not allowed to set up an actual cigarette vending machine in the same places you can set up a snack or soda machine. The person who owns it probably stuck them in there to make a profit and hasn't been busted yet.
On a side note, I also remember when I was 13 there was a gas station where it cost 50 cents per pack. And another that still had an ancient nickel soda machine which was awesome.
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43-922-863 Shut up and play your guitar. 
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