Here is what went wrong:
$ sudo cat /etc/sudoers.d/90-cloudimg-ubuntu
# ubuntu user is default user in cloud-images.
# It needs passwordless sudo functionality.
ubuntu ALL=(ALL) NOPASSWD:ALL

The user provisioned was 'smoser'. but 'ubuntu' was given passwordless
sudo.

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https://bugs.launchpad.net/bugs/1224684

Title:
  cannot sudo, prompted for password

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