Illicit tobacco enforcement escalated on three fronts inside a week: a record fine of more than $1.1 million against a Sydney tobacconist, new Tasmanian laws in force, and a national ban on nicotine pouch access routes that took effect today.
The Hornsby Precedent
A tobacconist in Hornsby has received the largest illicit tobacco penalty yet imposed in NSW, a fine of more than $1.1 million plus a permanent closure order, after continuing to sell illicit tobacco and vapes in defiance of earlier closure orders. The prosecution was brought by NSW Health under the state’s new tobacco laws, which carry maximum penalties of up to $1.54 million and seven years’ imprisonment for the sale or commercial possession of illicit tobacco. NSW retailers have needed a licence since 1 July 2025, and closure powers of 90 days and 12 months have been in use under Operation Sloane since October.
The Tasmanian Turn
Tasmania’s Public Health Amendment (Prohibited Tobacco and Other Products) Act came into force on 22 July, creating new offences for the sale and supply of illicit tobacco and vapes and giving the Health Department secretary the power to close offending businesses. Authorities there seized around $10 million in illicit tobacco and vapes over the past year. The government has flagged a consolidated standalone tobacco and vaping act as the next step, and every state now operates or is building a tobacco licensing regime.
The Federal Bill
The Combatting Illicit Tobacco Bill 2026, introduced in March, remains before Parliament with the Coalition’s stated support. It creates new offences for large-scale illicit tobacco activity linked to organised crime, lifts penalties to up to 15 years’ imprisonment, and extends telecommunications interception and proceeds-of-crime powers to serious tobacco offences. Border enforcement has already scaled: Operation PRINTWALL has detected more than 1,000 tonnes since December, and one national week of action produced 48 retail closure orders.
The Pouch Ban
From 24 July, nicotine pouches can no longer be personally imported, accessed through the Special Access or Authorised Prescriber schemes, or compounded by pharmacists. With no pouch product approved on the ARTG, there is now effectively no lawful retail or import route. The timing follows survey data showing past-year pouch use highest among 18 to 24 year olds, at 8.4 per cent.
The Market Behind the Crackdown
The enforcement wave is chasing a market that has inverted. Daily smoking is at a record low of 5.6 per cent, yet 34 per cent of current smokers report recent illicit tobacco use, more than double the rate of three years ago, and experimental ABS analysis estimates illicit sources supplied around 80 per cent of all nicotine consumed last year. The ATO puts the lost duty at $3.2 billion for 2023-24, with excise now at $1.53 per stick, roughly $38 in tax on a 25-pack. The Illicit Tobacco and E-cigarette Commissioner values the black market at between $4.1 billion and $6.9 billion a year.
A Note for Independent Operators
Commercial possession penalties apply to what is on the premises, not what the retailer knew, so supply-chain assurance is now a compliance issue: buy only from licensed wholesalers, keep invoices, and treat any offer of cheap stock as the risk it is. Keep licences current and displayed. Every enforcement win also returns volume to the legal market, and licensed operators are the ones positioned to receive it.