Over the last five financial years, NSW Health conducted over 10,400 inspections of tobacco retailers, resulting in the seizure of more than 25.6 million cigarettes, over 7,000 kilograms of other illegal tobacco products and over a million vapes, with an estimated street value of over $64 million. Data on inspections show that:

• The amount of illegal cigarettes and other tobacco that have been seized during retail inspections has considerably increased over time. This is also true on a per-inspection basis. Just over the last two financial years, the:
  • Number of illegal cigarettes seized per inspection more than doubled, from 3,600 per inspection in 2023-24 to 8,000 per inspection in 2024 25
  • Amount of other illicit tobacco seized per inspection increased more than 50%, from 1.1. kilograms per inspection in 2023-24 to over 1.7 kilograms per inspection in 2024 25.

Daily smoking rates have decreased in NSW over the past 20 years to 6.9% in 2024, the lowest rate on record. However, rates remain high for some groups. The illicit trade has both social and economic costs. All tobacco use is harmful and Illicit tobacco:

• Undermines NSW’s tobacco control policies (e.g., illegal sales to minors)
• Perpetuates tobacco use (especially among people on low incomes)
• Undermines public health policies aimed at reducing tobacco-related harm
• Is sold at reduced prices, undermining legitimate businesses
• Is linked to organised crime syndicates who capitalise on the product’s high profitability to fund other crimes, such as the global arms trade, illicit drug production and trafficking, and terrorism
• Results in significant losses in tax revenue at the Commonwealth level.

The NSW Government has introduced comprehensive legislative reforms targeting the illicit tobacco and illegal vaping market, including:

• A new Tobacco Licensing Scheme commenced on 1 July 2025 to provide greater oversight of the tobacco retail industry, support enforcement efforts, deter tobacco retailing businesses from operating outside of the law and support a comprehensive approach to tobacco control
• A cross-agency NSW Illicit Tobacco Taskforce was established with senior representatives from NSW Health, NSW Police, the Department of Customer Service, the Department of Creative Industries, Tourism, Hospitality and Sport, The Cabinet Office, and the Department of Communities and Justice. The Taskforce has developed options and recommendations for the NSW Government to strengthen compliance and enforcement activities in NSW to reduce the availability of illegal tobacco in the community
• On 6 August 2025 the NSW Government introduced the Tobacco Legislation (Closure Orders) Amendment Bill 2025 to Parliament. These proposed new laws if passed introduce:
  • Substantial penalties for tobacco retailers selling without a license:
    • A new offence for the commercial possession of illicit tobacco with a maximum penalty of $1.54 million and/or 7 years' imprisonment
    • New penalties for the sale of illicit tobacco with a maximum penalty ofr $1.54 million and/or 7 years' imprisonment
  • The introduction of short-term (up to 90 days) and long-term (up to 12 months) closure orders for premises selling illicit tobacco, illegal vaping goods, or selling tobacco without a licence
  • New offences and penalties for anyone who breaches these closure orders, including for entering closed premises or selling products from closed premises
  • New lease termination powers for landlords where a closure order is in place
  • New nation-leading offences for falsely claiming to be licensed, resisting seizure, and attempting to retake seized products.

In addition to these new measures, the NSW Government wishes to undertake consultation on a new offence for landlords who knowingly lease their premises to illicit tobacco and vape suppliers.

On 21 August, the NSW Government announced the establishment of the Centre for Regulation and Enforcement within NSW Health (the Centre). The Centre will be a dedicated unit of 48 staff across NSW, strengthening compliance with tobacco and vaping laws through consistent statewide enforcement. It will work closely with the Australian Border Force, NSW Police, and the Therapeutic Goods Administration to coordinate intelligence, joint operations, and regulatory action.

The introduction of a landlord offence in NSW is intended to encourage due diligence by landlords and address situations where some landlords knowingly lease premises to tenants engaged in the supply or possession of illicit tobacco and illegal vapes. This conduct not only undermines legitimate business operations but exposes communities to associated criminal activities and public health risks. The proposed legislation aims to disrupt these supply chains by creating accountability for landlords and encouraging proper oversight of how their premises are used.

While the NSW Government is still considering the details of the proposed offence, it is broadly intended to apply to commercial landlords who allow their premises to be used for the supply or possession of illicit tobacco, or illegal vaping products.

The offence is proposed to incorporate a requirement of knowledge, so that landlords who only become aware of unlawful activities after they have occurred would not be captured. A key challenge would be to define clear criteria for establishing knowledge, while avoiding unintended impacts on landlords acting in good faith. The policy's primary objective focuses on disrupting organised crime operations rather than penalising legitimate property management activities.

The specific legislative framework, including the choice of statutory instrument is still under development.