Australia has long had a tough public health stance on smoking. Successive governments spent decades driving down smoking rates through plain packaging, graphic health warnings and steep excise duties. Yet a troubling picture now emerges from the nation’s first dedicated report by the Illicit Tobacco and E-cigarette (ITEC) Commissioner. Half of all tobacco products sold in Australia are now illicit, and the criminal networks profiting from it are only getting bolder.

The 2024 to 2025 ITEC Commissioner’s Report, tabled in the Australian Parliament, provides the most comprehensive assessment ever conducted of illicit tobacco in Australia. The figures are stark. Customs agencies imported between 3,312 and 5,397 tonnes of illegal tobacco into Australia during the financial year, on top of 575 tonnes produced domestically without a licence. At the mid-range estimate, the black market cigarettes Australia is grappling with represent a $5.6 billion criminal enterprise, reaching up to $6.9 billion at the high end.

How Illicit Tobacco in Australia Turns Tax Evasion Into Violence

The mechanics of the illicit tobacco trade are not complicated. Legal tobacco attracts an excise equivalent duty of $1.50 per stick and a 10 per cent GST. By dodging both, criminal networks can undercut legitimate retailers by a wide margin. That makes their product attractive to price-conscious smokers. The estimated excise evaded on illicit tobacco in 2024 to 2025 alone ranges from $7.7 billion to $11.8 billion. In a striking comparison, the excise paid on all legal tobacco imports that year was also $7.7 billion. The government may be losing as much revenue as it collects.

But the cost is not only financial. Illicit tobacco in Australia has become deeply entangled with organised crime. Intelligence shows that most syndicates in the illegal tobacco trade run diversified criminal businesses, using tobacco profits to fund other harmful activities. The tobacco war across Victoria, New South Wales, Queensland and Western Australia brought firebombings, shootings, extortion and murder. Criminal groups were fighting for dominance in this market.

The arrest of reputed kingpin Kazem “Kaz” Hamad in Iraq in January 2026 made the situation more volatile, not less. As The Age reported in March 2026, the power vacuum from his detention triggered a fresh wave of arson attacks and shootings. Rival factions began testing the resolve of the cartel he built, known as The Commission. More than a dozen incidents were recorded across multiple states in the weeks after his arrest.

Vapes: Australia’s Black Market Cigarette Problem Gets Worse

If the illicit tobacco figures are alarming, the data on e-cigarettes is extraordinary. The ITEC Commissioner estimates that 95.7 per cent of the entire e-cigarette market in Australia operates outside health and regulatory safeguards. That represents a $1.6 billion illicit industry that regulators and law enforcement can barely see.

Since July 2024, vaping products can only be legally purchased from pharmacies. They must be reusable, contain only controlled nicotine levels, and carry only mint, menthol, or tobacco flavours. Everything else, including the brightly coloured, fruit-flavoured disposable vapes still widely available in corner shops and online, counts as illicit.

A consumer survey of 4,000 nicotine users conducted in March 2025 formed the basis of the ITEC Commissioner’s estimate. The results painted a picture of a market that had simply outpaced regulation. Products stockpiled ahead of the July 2024 reforms are still moving through the supply chain. The downstream effects will likely cloud data analysis for years to come.

The health stakes are serious. Research shows vape aerosols can contain hundreds of toxic chemicals along with heavy metals including iron, chromium, nickel and lead. Australian health authorities have also recorded overdoses from illicit vaping products laced with nitazenes, a class of synthetic opioids far more potent than morphine. Young people take up vaping at far higher rates than older Australians, putting them at serious risk of entrenched nicotine addiction.

Record Seizures of Black Market Cigarettes in Australia, But Gaps Remain

Enforcement agencies made real progress during 2024 to 2025. They seized a record 2,244 tonnes of illicit tobacco, representing 61 per cent of legal cigarette clearances during the year. The Australian Border Force and the Therapeutic Goods Administration seized more than 10 million vaping products and accessories since January 2024. The Australian Taxation Office boosted its illicit tobacco seizures by 39 per cent compared with the previous financial year.

In raw numbers, those seizures included 2.66 billion cigarettes, 509 tonnes of loose leaf tobacco and 7.5 million e-cigarette products. The street value of seized tobacco alone reached $3 billion.

Yet the numbers also expose how much is getting through. Authorities estimate between 3,312 and 5,397 tonnes of illegal tobacco entered the country in a single year. They seized around 2,244 tonnes. That means thousands of tonnes of black market cigarettes are reaching Australian consumers undetected every year, most arriving by sea in shipping containers from China, Hong Kong, Singapore and the United Arab Emirates.

Biosecurity researchers from Murdoch University raise a further concern. Illicit tobacco is a dried plant product and can carry invasive pests such as the khapra beetle. This tiny insect is the number one biosecurity threat to Australia’s $26 billion grain industry. Its larvae can survive in shipping containers for years. The scale of undetected tobacco imports, the researchers argue, creates a significant and underappreciated biosecurity exposure.

How Criminals Keep Gaming the Illicit Tobacco Market in Australia

One reason illicit tobacco in Australia has grown so fast is that the risk-to-reward calculation has heavily favoured the criminals. The ITEC Commissioner’s report is candid about this. Tobacco trafficking attracts lower penalties than drug trafficking, even though criminal networks use the same methods for both. Profits are largely sheltered through cash transactions, money laundering and non-traditional financial infrastructure that makes tracing proceeds difficult.

Legal tobacco clearances fell by more than half between 2022 to 2023 and 2024 to 2025. That dramatic drop does not reflect an equivalent fall in smoking rates. It reflects criminals replacing legal supply with illegal supply. The illicit market has not grown in spite of Australia’s tobacco control policies. In important respects, it has grown because of them. High excise creates a massive price gap between legal and illegal products, and organised crime moved quickly to exploit it.

A Four-Part Response Taking Shape

ITEC Commissioner Amber Shuhyta is clear that no single measure will fix this. The report outlines four priority areas: stronger consequences for offenders, enhanced multi-agency capability, unified information and data sharing, and demand reduction.

The Australian Government has committed $345 million across several measures to fight black market cigarettes in Australia. That includes $156.7 million announced in the 2025 to 2026 Budget to strengthen powers for seizing criminal profits and assets. Several states have introduced tobacco retail licensing schemes. NSW and Victoria joined a nationally consistent framework that now covers all states and territories.

Cross-jurisdictional cooperation has improved markedly. The ITEC Commissioner’s office held more than 200 engagements with Commonwealth, state, territory and international agencies in its first year. It also hosted the inaugural National ITEC Symposium, drawing more than 80 representatives from law enforcement, health and regulatory bodies. The office forged relationships with counterparts in the United Kingdom, Canada, New Zealand, Hong Kong and the United Nations Office on Drugs and Crime.

Still, the Commissioner is measured about expectations. “It will take time and sustained commitment to see this through,” the report states. Criminal networks are adaptive. As authorities tighten one part of the system, illicit actors seek workarounds through novel products and non-traditional financial channels for laundering proceeds.

The Demand Side Cannot Be Ignored

Perhaps the most uncomfortable finding in the report is the role of ordinary consumers. Communities across Australia have normalised illicit tobacco. Many buyers do not see it as a serious matter. Products seem cheap and are easy to find. The connection to organised crime and broader social harm is not obvious at the point of purchase.

The ITEC Commissioner is explicit: the public has a role to play. Choosing to buy a cheap pack of untaxed cigarettes or a flavoured disposable vape from a corner store is not a victimless act. That purchase directly funds criminal networks responsible for firebombings, extortion and violence. It also strips the community of tax revenue that funds hospitals, schools and social services. Buyers also expose themselves to unregulated products whose contents are entirely unknown.

Demand reduction must go beyond health campaigns about smoking rates. It needs to target the specific reasons consumers choose illicit products, particularly in communities where price sensitivity is highest and where entrenched addiction meets disadvantage. With 50 to 60 per cent of all tobacco sold in Australia now illicit, and 95.7 per cent of the vape market operating outside the law, the scale of that task is impossible to overstate.

Source: dbrecoveryresources