It looks like the hold put pressure on the carotid arteries on both sides of the neck while pushing his head forward, which restricted blood flow to the brain leading to unconsciousness.
The sensation he felt as he was passing out probably was a sensation of not being able to breathe.
Why is the NYPD enforcing tax law? This is small time stuff. Its all about the pennies the city would receive on the sale of untaxed cigarettes.
It boils down to $$$. Get stopped in NYC with a small amount of marijuana, you get a ticket.
Selling "loosies" isn't a big deal, but in the past, that sort of law enforcement has paid big dividends.