Unpacking Australia’s illicit tobacco trade

Australia has some of the strictest smoking laws in the world – but that doesn’t mean the tobacco trade is going down easily. The signs are everywhere if you look closely enough: maybe you’ve spotted people with cigarette packets that don’t have the standard plain packaging look, or perhaps you’ve caught a whiff of a vape cloud that smells fruity or sweet. Or, most concerningly, you might have noticed some telltale signs of organised crime in your neighbourhood. Of course, tobacco is legal in Australia, but the laws are extremely stringent; the instances described above are all examples of illegal tobacco activity. This is the world of Australia’s illicit tobacco trade.

As part of Deakin’s Ever Wondered series, we hear from Dr James Martin, associate professor in criminology, about how and why the illicit tobacco trade operates in Australia and what its future might look like.

Australians have been using tobacco since the 1700s when visiting Indonesian fishermen introduced the substance to Indigenous Australians. Usage then grew in Australia with the arrival of European settlers in the late 1700s. Smoking rate statistics are a little sparse before 1974 (when the Anti-Cancer Council of Victoria conducted its first survey), but figures suggest that 43% of men and 33% of women reported being smokers in 1976 – the same year Australia banned tobacco advertising.

Since that 1976 advertising ban, Australia has tightened its grip on the tobacco industry and smokers in general, implementing plain packaging laws in 2012, vape laws in 2025 and giving Australia the most expensive cigarettes in the world – all of which have seen smoking rates (at least, those who report being smokers) drop to just 5.8%.

As we near the end of 2026, though, a new chapter is being added to the tale of tobacco in Australia: the illicit tobacco trade.

Tobacco is highly regulated in Australia, but it is legal to sell and consume within the government’s goal posts. The illicit tobacco and cigarette trade, on the other hand, is classed as ‘any practice related to distributing, selling, or buying tobacco products that is prohibited by law.’

As of 2025, illicit tobacco comprised 80% of all tobacco consumption in Australia, resulting in excise losses of up to $11.8 billion and $4.1 –$6.9 billion in profits going to organised crime groups. According to Martin, these illicit tobacco statistics show that Australians are less than happy with current laws.

‘Laws need to be accepted broadly by people who you're regulating, and there isn't that,’ Martin says. ‘There's a mass consumer revolt going on here.’

There are two sides to the illicit tobacco market in Australia: the consumer side and the supply side. For consumers, punitive policies aren’t necessarily discouraging use; they’re just pushing users to the black market, as Martin explains is the case with vapes.

‘We're the only country in the world to have a pharmacy-only model for vapes,’ he says. ‘Most pharmacies don't want to sell vapes and most consumers don't actually want to buy pharmacy vapes either, because they don't have nice flavours and they could get talked down to when they have to do a mandatory consultation with a pharmacist. A lot of people are saying, “I don't think of myself as someone who's sick and needs medicine – I just prefer vapes to cigarettes. Why do I need to go through all this rigmarole to get a vape that I don't even like when I can just go down to the shop and get an illicit one?”’

The other side of Australia's illicit tobacco trade is supply and sale. Some 40,000 retailers are selling illicit tobacco products, plus there is the broader network of organised criminals making sales – as evidenced by the arrests of individuals with links to outlaw motorcycle gangs and the cases of gang-affiliated retail store firebombings.

From Martin’s perspective, those organised criminals were always looking for ways to make money – Australia’s illicit tobacco trade just happens to be one way to do it. As he explains, a tobacco ban would be unlikely to deter criminal organisations.

‘Organised crime is attracted by profits,’ Martin says. ‘They don't even really care what the products are. You could ban cars or ban Coca-Cola and organised crime would go – “great!” It's not like there's some inherently criminal aspect to it that they're interested in. They're just interested in making money.’

Tobacco isn’t illegal in Australia, though laws are edging towards a quasi-ban in which legal products are prohibitively expensive (in the case of cigarettes) or highly regulated and restricted (in the case of vapes). For Martin, bans are not the answer, but nor is a legal framework tacit endorsement.

‘Just because we might say, “Alright, maybe we should have a legal market for this,” it doesn't necessarily mean it needs to be socially endorsed,’ he says. ‘We have legal markets for gambling, for example, and most parents wouldn't think, “I want my child to grow up and gamble." But there's broad understanding that, as socially unappealing as those types of activities are, they're better off being legal because if they're legal, they can be regulated. And if they're not legal, they don't go away. They're just run by organised crime groups.’

So, is there actually a solution to the illicit tobacco trade in Australia? As Martin explains, however well-intentioned the government’s current policies might be, they’re not effective at reducing the illicit tobacco market.

‘We're making the same mistakes with tobacco and nicotine that we're making with other illicit drugs,’ Martin says. ‘We're just piling more and more money into the police, and they're doing the best that they can with that money; it just doesn't impact the market. And we’re massively underfunding demand reduction and particularly harm reduction.’

Ultimately, the future of Australia’s illicit tobacco trade is in the hands of the government. The Coalition and One Nation have both recently released policies promising to slash the tobacco excise as a means of reducing demand for illicit tobacco – promises that have already been subject to criticism and doubt. The Labor Government has implemented its own set of laws, ‘targeting businesses and taking action against those who break the law’ by selling or supplying illicit tobacco, and internally exploring the effects of excise cuts.

The illicit tobacco trade in Australia seems set to remain a political problem child, no matter which future government inherits it. For Martin, the organised criminals behind Australia’s illicit tobacco trade will remain as long as there is financial incentive to do so.

‘They're really product agnostic,’ he says. ‘They're focused on profit and they'll go wherever the profits are.’