In the first episode of Altered Carbon, there are some other folks that get placed into second-rate sleeves that happen to be 'available'. Our hero seems to be in a grown/cloned/enhanced sleeve, but where do the budget models that the state provides come from?
In addition to what stonemetal says—that the sleeves of prisoners are appropriated for use by others during their prison term—there are also talks of sleeve mortgages. Mostly as regards prisoners. But the usage of the term "mortgage" implies that people may use their sleeve as collateral to obtain money, and if they default on the debt then that collateral may be confiscated. Prisoners seem to incur sleeve mortgages automatically, so anyone who gets out early may not get their sleeve back if the remaining terms of the mortgage are not paid off.
We see this at the very end where Kovacs mentions getting Ava her original body back. He had negotiated for her release from prison, but initially she did not have her original sleeve. In the end Kovacs says he paid off her sleeve mortgage so she could get her body back.
There are also implicit indicators that people may sell off usage of their sleeve for certain purposes, such as the one
uses sometimes on trips to Japan, and how no one bats an eye at the idea that someone might pay to fix any damages done to the temporary sleeve. After all, if bodies are interchangeable now, then why not commodify your own if it's desirable enough?
When people go to prison it appears that their sleeve is forfeit. All of owners of the low end sleeves that are talked about in more than passing
including Kovacs' own
are in prison.