Small paper tubes filled with shredded newsprint and occasionally tobacco. Smoking them causes you to become 30% cooler and fills you with the power of lung cancer.
If you're really lucky, you might find cigarettes after fights, or in certain improbable events, or occasionally after sacrificing your charm to the kissing booth or abusing Doktor Improbable disguised as a pinata. Fighting on a higher rank gives you more cigarettes.
Much like in prison, cigarettes are a vital currency to the Island. Some shopkeepers are so addicted to cigarettes, they only accept payment in cigs. These shopkeepers sell things such as Mounts, Backpacks, Bandoleers, Jewelry, Tattoos, and even Dwelling related stuff such as stakes, toolboxes and furniture. You can also gamble with them in the Prancing Spiderkitty.