Organized crime groups control more than half of Australia's tobacco market, sparking a violent turf war and a multi-billion dollar loss in government revenue.
A multi-billion dollar illicit tobacco market has prompted coordinated legislative and enforcement responses across Australian states and the federal government. Organized crime groups are estimated to control more than half of the tobacco market, leading to violence, lost tax revenue, and a proliferation of illegal storefronts.
Market Scale and Criminal Impact
The illicit tobacco trade in Australia is estimated to be worth between $4.1 billion and $6.9 billion annually. The Illicit Tobacco and E-Cigarette Commissioner estimates that organized crime groups control 50 to 60 percent of the overall tobacco market, with research suggesting this could rise to nearly 90 percent within three years. The federal government estimates a loss of $7.7 billion to $11.8 billion in excise revenue.
"The issue has evolved from primarily a health and revenue concern into a serious organized crime crisis." – Assistant Minister for Customs Julian Hill
The trade has been connected to violent crimes, including arson attacks, fire bombings, drive-by shootings, and murders, particularly in Victoria, where over 200 fire bombings and several deaths have been linked to turf wars over the illicit market. Similar violence has spread to Western Australia's Wheatbelt region, with eight stores suspected of selling illegal tobacco targeted in attacks over three months.
Federal Government Response
The Australian government announced plans to enhance investigators' capabilities, including expanded wiretap and asset seizure powers. Proposed changes include increasing maximum jail terms for tobacco offences by two to three times and elevating tobacco offences to the status of "serious crimes," enabling asset seizures for "unexplained wealth" linked to criminals.
The Commonwealth is also addressing online markets and the unlawful trade of nicotine pouches. The Australian Transaction Reports and Analysis Centre (AUSTRAC) wrote to major banks in November 2023, calling for increased oversight of tobacco and convenience stores. AUSTRAC reported receiving 337 suspicious matter reports using a specific code since November and made 76 referrals to partner law enforcement agencies. Bank executives reported that more than 1,000 customers have been forced out of their banks or recommended for exit following reviews.
State Legislative Reforms
Western Australia
The Western Australian government passed amendments to the Tobacco Products Control Act 2006 on March 12, introducing some of Australia's strictest penalties:
- Maximum fines now reach $4.2 million for individuals and $21 million for companies
- Up to 15 years imprisonment for possessing a commercial quantity of illicit tobacco
- Store closure orders, allowing businesses supplying illegal products to be shut down during investigations
A second round of amendments is planned before the end of the year, including further tightening of licensing and allowing stores to be closed for up to a year. The state formed an Illicit Tobacco Taskforce, with senior WA Police officer Steve Post appointed to lead enforcement efforts within WA Health. The government allocated $5 million to expand the Tobacco Compliance Unit, aiming for an initial increase to 40 full-time equivalent staff.
Taskforce Maverick has charged over 20 individuals with more than 60 offenses related to illegal tobacco and vaping products.
In Fremantle, the city council unanimously voted to amend planning laws, requiring future convenience store owners to submit publicly advertised development applications. The change addresses resident complaints regarding a growing number of convenience stores suspected of selling illicit tobacco and vaping products.
Victoria
Victoria's new $46 million tobacco licensing scheme commenced on February 1, with Tobacco Licensing Victoria (TLV) established to regulate sales. More than 4,000 applications for tobacco licenses were submitted before the deadline, though an estimated 8,000 tobacco retailers operate in the state, with around 1,300 identified as selling illicit tobacco.
TLV has only 14 inspectors for the entire state. In its first three months of operation, no criminal charges were filed. TLV issued 27 infringements totaling nearly $250,000 and seized more than $6 million in illicit tobacco products. In contrast, Victoria Police seized a single truck carrying $5 million worth of tobacco in mid-2025.
The Victorian government announced new legislation granting authorities power to close shops engaged in illegal tobacco sales and empowering landlords to terminate leases for such businesses. Building owners who knowingly lease premises to illicit operators face substantial financial penalties. TLV and Victoria Police will be authorized to issue immediate 90-day closure orders for non-compliant shops. Courts will be able to impose permanent or indefinite closures.
Tasmania
The Tasmanian government introduced the Public Health Amendment (Prohibited Tobacco and Other Products) Bill 2026, which would grant authorities power to close shops selling illicit tobacco. Under the proposed laws, businesses could face temporary closure for up to 90 days, and repeat corporate offenders could incur fines exceeding $3 million.
Joint operations by tobacco control officers and police have resulted in seizures of 2.1 million cigarettes, over 1,000 kilograms of loose tobacco, and 735 vapes, with an estimated street value of $3.2 million. In Devonport, authorities seized approximately 2,000 cartons of illegal tobacco valued at $390,000.
Other Jurisdictions
A report by the Australian Council on Smoking and Health (ACOSH) ranked Queensland highest for its response to illicit tobacco, followed by South Australia and New South Wales. The Northern Territory was ranked eighth and last, attributed to outdated legislation and lack of enforcement resources. The Northern Territory has the highest percentage of smokers in Australia, with nearly one in five deaths in the jurisdiction linked to smoking.
Counterfeit Packaging and Supply Chains
Australian criminal syndicates are utilizing counterfeit plain packaging manufactured in China, available on online marketplaces for as little as $0.05 per pack. These fake packs allow illicit tobacco, either illegally grown in Australia or smuggled from overseas, to appear legitimate.
A pack of cigarettes costs approximately 50 cents to produce, while a single cigarette sells for about one dollar on the black market. – Nick Bunker, Director of Environmental Health, Tasmania
The Australian Border Force (ABF) reported seizing an illegal cigarette manufacturing machine and eight boxes of counterfeit plain packaging in north-western Sydney. An ABF spokeswoman confirmed awareness of organized crime groups importing such packaging for illicit tobacco.
In Tasmania, authorities report counterfeit cigarettes described as "near-perfect" appearing in shops, with some sold to legitimate retailers as genuine stock.
Consumer Demand and Public Health Context
The increase in illegal tobacco trade has been driven by consumer demand for cheaper cigarettes, a response to high government taxes adding approximately $30 to each legal pack. Legal cigarettes cost around $50 per packet in Victoria and $36 elsewhere, while illegal brands sell for $12 to $20.
Public health experts note that demand-side factors remain unaddressed. Professor Lisa Wood from Notre Dame University stated that discussions often overlook why many individuals continue to use tobacco or are unable to quit. Smoking rates persist among specific demographics, including rough sleepers, individuals with mental health concerns, and those on low incomes.
Dr. Ramya Raman, Chair of the Royal Australian College of General Practitioners WA, observed a concerning rise in nicotine addiction, particularly among young people. She called for increased government support for individuals attempting to quit, including counseling and motivational interviewing.
Enforcement Challenges
Concerns have been raised regarding the adequacy of enforcement resources across jurisdictions. Victoria's 14 inspectors are responsible for regulating an estimated 8,000 tobacco retailers. In comparison, New South Wales has approximately 60 inspectors, Queensland will have 43, and Western Australia will have around 40.
Victoria Police has reportedly declined to provide officers for regular escort duties for inspectors due to safety concerns. Two law enforcement sources described Victoria's regime as a failure due to poor planning and lackluster enforcement, alleging inspectors focus on supermarkets and chain stores rather than specialty tobacco shops known for illicit distribution.
A federal parliamentary inquiry into the tobacco crisis in Australia will begin public hearings, focusing on government policy and law enforcement in the $8.5 billion black market. The inquiry is expected to address the impact of federal excise tax on cigarettes.