Four out of five cigarettes smoked in Australia are now illegal, and the states have stopped relying on fines to deal with it. The new enforcement weapon is the closure order, and in the past month it has been used from the Tweed Coast to suburban Adelaide.
A market four fifths illegal
Macquarie University researchers reported this month that illicit nicotine products, including cigarettes, vapes and loose leaf tobacco, made up around 80 per cent of consumption in 2025, up from around 12 per cent in 2017, based on Australian Bureau of Statistics wastewater data. Illegal packs retail for $11 to $25 against up to $65 on average for legal brands. There is no control over what is in them; the researchers warn that illegally grown tobacco can expose smokers to heavy metals such as lead and arsenic.
For retailers doing the right thing, that price gap explains years of shrinking legal tobacco sales. Every carton sold under the counter nearby is margin lost from a licensed counter.
The closure order count in NSW
NSW gained short term closure powers in November 2025 and has used them hard: 294 closure orders issued by early June, with 176 still in force. The orders run for up to 90 days, and for most small stores a 90 day closure is terminal.
The enforcement is reaching well beyond the city. In Cessnock on 3 June, inspectors backed by police checked six businesses and closed five of them for 90 days, seizing approximately 208,000 cigarettes, almost 40 kilograms of loose tobacco and more than 850 vapes. On the Tweed Coast, Cabarita Convenience at Cabarita Beach sits on the official closure register until 3 August for selling illicit tobacco without a licence.
Three states, one direction
Victoria has passed laws allowing illicit tobacco retailers to be shut for up to 90 days, with penalties above $2.4 million and up to 20 years imprisonment for defying orders, alongside a new licensing scheme that took effect from 1 February. South Australia secured $3 million in joint Commonwealth and state funding on 9 June to scale up enforcement; its consumer regulator has already run more than 900 inspections and issued 277 closure orders since mid 2024.
What it means at the counter
Two things follow for fuel and convenience retailers. First, the field is slowly being levelled. A closure order takes an illegal seller out of the market for three months at a time, and some of that demand returns to licensed stores. Operators near a closed outlet should expect movement in the tobacco category and stock accordingly.
Second, the compliance bar has risen for everyone. Closure orders are landing on small convenience stores, not just dedicated tobacconists, and unlicensed selling appears on the register as often as illicit stock. Licences, storage and display practices, and the provenance of every line on the shelf are now worth checking, because proximity to illicit product has become a business risk rather than a paperwork issue.
The next six months
Watch the NSW closure register for pace, Victoria’s first closures as its licensing inspectors hit the ground, and whether the remaining states match the closure order approach. With tobacco excise still rising, the price gap driving the black market is not going anywhere; the question is whether sustained closures can squeeze the supply side faster than demand refills it.