The consequences of poor Government policy on tobacco (a short case study of the black market trade in tobacco in Australia)

[JohnS]

Today, September the 1st, 2025 the excise on tobacco products in Australia exceeding 0.8 grams of tobacco increased from $2158.65 per kilo of tobacco content to $2397.31. That's around a 11% increase. For cigarettes, being under 0.8 grams per stick of tobacco, the increase is 6.8%. Of course, in Australia we get two increases a year we've come to expect this, but the Government is now actually losing revenue due to the black market they've directly created due to these increases. Despite the advocation from advisers to change this policy to arrest this problem, the Australian Government is currently doing nothing. 

If you have time this week, please read the following articles below and be hopeful that this doesn't come to fruition in your part of the world!

60 tobacconists for every McDonald’s: How Sydney’s streets became consumed by smoke shops

Lucy Macken and Riley Walter - May 19, 2025 — 5.00am

There are about 20 tobacco outlets on Newtown’s busy main street – up from just a handful a decade ago. Despite the increasingly crowded market – and the lack of decent signage – business is brisk at the Red Shop.

Behind a store window plastered with gig posters, the premises looks mostly vacant. The shelves are largely bare, and there are unpacked boxes of soft drink on the floor and graffiti on the wall, but none of that matters because the only real business at hand takes place through a window cut into a plywood wall.

The Red Shop’s shelves might be empty but business is brisk through the window at the rear. Credit: Sam Mooy

“Got any cheap cigarettes?” the Herald asks after we identify ourselves to the cashier.

She does. There are packets of Manchester, UK-branded Benson & Hedges, and China’s state-owned Double Happiness, to name just a few. Premium black-market brands are worth $18, but cheaper varieties sell for $15.

If you want legal cigarettes, complete with plain packaging and graphic health warnings, you’ll need to go elsewhere because the Red Shop doesn’t stock them. You’ll also need to pay about $50.

While there is no suggestion that the Red Shop is involved in organised crime, and it is not facing any charges, the proliferation of illicit tobacco products and the price difference compared with authorised brands comes amid a boom in tobacco shops across Sydney.

Since 2015, the number of businesses registered to sell tobacco products of the illicit or legal variety has reached almost 20,000. That’s an increase from a reported 19,000 a year ago.

For every McDonald’s restaurant, there are 60 tobacco retailers for a product responsible for the deaths of an estimated 21,000 Australians a year.

“If it’s so easy for a journalist and members of the public to go into these stores and purchase these things, why is it so difficult for prosecution and police to shut them down,” said Professor Becky Freeman, of the School of Public Health at the University of Sydney.

“And when you consider that less than 10 per cent of the Australian population smokes, it just doesn’t add up.”

Inner West mayor Darcy Byrne has been wrestling with the proliferation of tobacco shops in recent years as more than 824 specialty tobacco stores have opened up across his council area, often around schools.

The Red Shop is one of more than 20 tobacco retailers on Newtown’s main street. Credit: Sam Mooy

“These shops have low overheads, they require a small space, but they’re not prioritising improving the amenity of the neighbourhood or making a long-term commitment to the main street,” Byrne said.

And yet for every new shop up for lease in the Newtown-Enmore area, at least one-third, if not half, of all inquiries are from tobacconists, said commercial agent David Cradock, of Wisebery Real Estate.

Almost 40 per cent of tobacco consumption across Australia was illicit last year, according to FTI Consulting’s latest industry-commissioned report Illicit Tobacco in Australia, due out mid-year. That’s an increase of 28.6 per cent from the year earlier.

The Tax Office defines illicit tobacco as any related product, imported or homegrown, that has not paid its required customs duty, which makes that 40 per cent of black-market sales a significant hit to federal government coffers – $6.7 billion in lost excise duties last year alone.

Tobacco’s status as the federal government’s fourth-largest source of revenue is projected to fall this year to be the seventh-largest revenue raiser.

To combat it, federal and state governments have rolled out a raft of measures, new fines and extra funding, including last year’s establishment of the Illicit Tobacco and E-Cigarette Commissioner role to co-ordinate efforts, and a nationwide ban on the sale of vapes outside of a pharmacy.

None of this has appeared to work, raising questions about how effectively the laws are enforced, the impact it’s having on high streets and risks posed by organised crime as it moves to corner the black market.

Policing the trade

The job of enforcing our tobacco regulatory regime falls to NSW Health. To that end, last year health inspectors seized an estimated 13.2 million cigarettes and 3300 kilograms of other tobacco products worth an estimated $14.7 million – triple the value of related black-market seizures in 2023.

When vapes, e-liquids and nicotine pouches are included, that total street value of seized products rises to about $24 million, thanks to almost 2000 retail inspections and largely concentrated in illicit tobacco hotspots in metropolitan areas.

If authorities are hoping to make up for the shortfall in excise duties, imposing fines is one way to do it. Last November a new regime of fines was introduced, increasing the penalty for anyone caught selling blackmarket tobacco products from $11,000 to $154,000, and up to $22,000 for selling to children. Higher penalties apply to corporate entities.

Further, the number of authorised inspectors across the state is set to increase from 14 to 28, and a new licensing scheme is to be rolled out from July 1 that ties the licence to compliance.

Shortly before this month’s federal election, Health Minister Mark Butler weighed in, offering a further $156.7 million to tackle the tobacco black market to add to the $188.5 million promised early last year on a border force crackdown.

The ABF is on the front line of the industrial-scale importation trade, averaging 141 detections a day of blackmarket tobacco products attempting to enter the country and seizing an estimated 1.86 billion cigarettes last year.

Professor Becky Freeman said enforcement of the state’s tobacco regulation regime did not go far enough. Credit: Peter Rae

It’s not enough, according to Professor Freeman. It’s a stance she shares with tobacco and convenience store industry representatives.

“The health department have increased their fines a lot, but compared with South Australia, it’s still too little,” said Theo Foukkare, chief executive of the Australian Association of Convenience Stores.

In November, the South Australian government introduced fines of up to $750,000 for a first offence of selling illicit tobacco and up to $1.1 million thereafter. It moved the enforcement and licensing responsibilities from the health department to Consumer and Business Services – the same department that oversees liquor and gaming.

Industry and health experts differ on a rollback on government excise on cigarettes.

Excise duties on cigarettes have increased almost threefold in the past decade, from 47¢ per stick in 2015 to $1.40 in March.

“It’s pretty clear that when the excise was originally introduced, largely between 2010 and 2019, it had a material impact on adult smoking rates,” said Foukkare. “But from 2019 to 2025, we’ve actually seen the legal market out-tax itself, and it’s having the reverse effect on consumers who are exiting the legal market and entering the illegal market.”

It’s an issue likely to be raised in the coming year after Premier Chris Minns agreed last week to the opposition’s terms for a parliamentary inquiry into the exploding illegal tobacco trade.

Shooters Fishers and Farmers MP Robert Borsak, who is set to chair the inquiry, said the automatic increase in excise duties year on year must indicate it’s not working.

Liberal MP Kellie Sloane, who has been pushing for the inquiry, said despite vapes being made illegal on the general market last year, they would also undoubtedly be raised given they are being sold with illegal tobacco.

“We also wanted to look at where responsibility for compliance falls because communities can’t possibly be protected by 14 compliance officers across NSW,” said Sloane.

“Even when that’s doubled, that’s still no match for what they’re up against, which is large-scale criminal enterprise.”

Tobacco’s winners

To know who the biggest winners are behind the proliferation of tobacconists, look to tobacco tycoons such as Ahmad Sabbagh, Muh’d Al Zoubi and Ghaith Jaradat, who together have a part or shared interest in about 30 TSG Station tobacconists across Sydney.

Ahmad Sabbagh didn’t stop to talk about his tobacco empire as he drove out of his Merrylands home. Credit: Sam Mooy

The dozens of franchises are all held in company names, often shared by one or two of them, making them among TSG’s best customers, which is itself the largest tobacco franchise in the country.

As far as TSG head office is concerned, shops run by Sabbagh, Jaradat and Al Zoubi are great operations: the stores are clean, fully stocked and set in prime locations such as Balmain, Potts Point, Bondi Beach and a dozen outlets across the CBD and inner city.

Such success has not only made them recognisable names in the tobacco franchise business, but has been parlayed into impressive home real estate.

Jaradat, 41, bought his first home less than two years ago, setting a then suburb record of $5.1 million for a derelict cottage in Malabar that is expected to be rebuilt into a more significant residence set on one of the suburb’s best streets, opposite Randwick Golf Course and with views across Malabar Bay.

Ghaith Jaradat bought his first Sydney home in 2023, setting a then Malabar house price record of $5.1 million. Credit: Sam Mooy

Al Zoubi, 49, has also staked his name to a suburb record of his own. In 2022, he bought one of Bexley’s best houses for a then suburb high of $4 million, buying a five-bedroom residence with marble finishes throughout, a swimming pool, spa and guest retreat. His initials feature on the property’s ornate steel gate.

The home of Sabbagh, 56, is no slouch either. The grand three-level mansion with basement garaging, pool and parkside views in Merrylands was built a few years ago on the site of what was a red brick house he bought in 2018.

But such success has brought with it the attention of health authorities.

All three men either declined to comment or didn’t return calls and texts for this story, and their lawyer said he was unable to pass on queries, but court records show they have upcoming local court appearances to answer allegations of the sale of illicit tobacco products in their stores.

The home of Ahmad Sabbagh is set on one of the best streets of Merrylands. Credit: Sam Mooy

Al Zoubi faces court this month to answer to six offences related to sale and display of a restricted substance in one of his TSG stores, and TSG Matraville co-owners Sabbagh and Jaradat are due to front local court to face allegations related to the sale of almost 200 packets of cigarettes that don’t carry a health warning.

If found guilty, Sabbagh knows the penalties have increased in recent years. In 2022, he pleaded guilty to two charges of selling nicotine vapes and was sentenced to a two-year conditional release order and ordered to pay the health department’s $7000 legal costs and a $180 for the analysis of the vape. It came on the back of four warnings from NSW Health inspectors.

The Bexley home of Muh’d Al Zoubi was bought in 2022 for a then Bexley house price record of $4 million. Credit: Sam Mooy

Penalties for importation are far greater. A few months before Jaradat bought his Malabar home, he was slapped with one of the Therapeutic Goods Administration’s largest fines for the illegal importation of nicotine vapes on four of Jaradat’s corporate entities, totalling $588,840 after border force intercepted the importation of 379,600 vapes.

The cases did not raise any involvement by Sabbagh, Jaradat and Al Zoubi in organised crime, and this masthead does not suggest there is any such connection.

Crime concerns

The so-called tobacco wars have been making headlines in Melbourne for the past two years, and while Sydney has been left comparatively unscathed, two firebombings this month in Auburn and Mount Pritchard have authorities on high alert.

Wherever that commodity goes, violence follows, says Jason Box, commander of NSW Police’s criminal groups squad, targets of which have become increasingly involved in illicit tobacco in the past year.

Chief among them is the Alameddine crime gang, allegedly stealing millions of dollars worth of illicit tobacco from rival organised crime networks importing the product into the country.

Detective Superintendent Jason Box says violence follows illicit tobacco. Credit: Sam Mooy

Strike Force Sheringham was launched last September to investigate the Alameddine network’s involvement in the illicit tobacco market through a spate of violent robberies, starting in March last year, when the group allegedly stole $1.5 million worth of tobacco and $10,000 worth of cigarette papers from a Casula storage unit.

Six months later, eight Alameddine members and associates were arrested over several successful and attempted robberies. Associates of KVT, a predominantly Fijian street gang linked to the Alameddines, were also arrested.

In subsequent raids, detectives seized more than 1.4 tonnes of illegal tobacco, 600 illegal vapes worth around $600,000, and large amounts of cash from homes linked to the Alameddines.

Mohamad Kaddour leaving Burwood Local Court. Credit: Janie Barrett

In January, the violence reached new heights when at least half a dozen Alameddine associates allegedly broke into a Condell Park storage unit and held three men hostage during an attempted tobacco robbery.

When police found the men inside, they had been beaten and had their arms and legs bound, and one of them had a toe partially severed. It is not known who the tobacco was being stolen from or who had imported it.

Lawyers for the three men charged over the incident – Ahamad Dudu, Mohamad Kaddour and Iafeta Fepuleai – say police have put forward no evidence establishing their clients’ links to the Alameddine clan. Police are yet to identify the rival organised crime networks being targeted by the Alameddines, but believe the crime family is just one of the key players in the illicit tobacco market.

Ahamad Dudu was also implicated in the attempted tobacco robbery at Condell Park in which one of the victims had his toe partially severed. Credit: Janie Barrett

For now, Box said they have stemmed the violence linked to illicit tobacco. But while NSW Police is at the forefront of the fight against organised crime, it has actively distanced itself from policing illicit tobacco.

“Our involvement is primarily about the acts of violence that was used by these people to take the tobacco,” Box says.

“I think our system and our response is adequate, and we’ll keep maintaining that.”

Lighting up High St

Darcy Byrne has come up with his own proposal to counter the spread of tobacconists in the Inner West. Last year he wrote to Planning Minister Paul Scully to urge him to look at amending the planning regulations to require tobacconists to lodge a development application.

“As it is now, it’s just a change-of-use application, so any main street business can be flipped into a tobacco store and we don’t really have a right of refusal,” Byrne said.

“If a DA was required and had to articulate a social impact assessment on the local community, then there would be grounds for refusal if there are already other tobacconists nearby, and particularly if they are near a primary school.”

Anything that addresses the issue would be welcomed by James Cottam, commercial property manager at Richardson & Wrench Newtown, who says the influx of tobacconists locally is distorting the commercial real estate market.

As more tobacconists come in, they’re offering above market rents, which is artificially inflating the market and making it harder for other businesses to compete, said Cottam.

“I’m obligated to pass that higher offer on to the owner, but I urge them not to accept it.”

And after recently reported firebombing of tobacconists in Sydney, the Insurance Council of Australia has confirmed that some insurers are taking this into account when pricing insurance.

“Shabby shop fit-outs are part of it,” says Cradock, adding that the numbers don’t stack up. “There’s some sort of monkey business at play there.”

Source: https://www.smh.com.au/national/nsw/60-tobacconists-for-every-mcdonald-s-how-sydney-s-streets-became-consumed-by-smoke-shops-20250428-p5lute.html

[JohnS]

The woman with $2m cash in her boot and the violent trade as ‘lucrative as drugs’

Sally Rawsthorne - August 7, 2025 — 5.00am

The woman had no business having such an astonishing amount of cash, police say.

A seemingly ordinary person, living in modest circumstances on the western fringe of Sydney, she was driving a small hatchback when investigators pulled her over on a frigid winter’s night.

The woman (left) allegedly had $2 million in cash in the boot of her car. Credit: NSW Police

Police say the woman, who cannot be named for legal reasons, had $2 million in the boot of her car that was allegedly the proceeds of illegal tobacco.

‘A bit of pressure’

Illicit tobacco is thriving in Australia. It’s well established in Melbourne, and the burgeoning scene in Sydney has changed streetscapes, undone years of public health victories and opened another fault line in the city’s underworld.

Nationwide, the Tax Office says the illicit tobacco market has skyrocketed from $980 million in 2016-17 to more than $6 billion in 2022-23.

“It’s obvious that in an economy where people are having difficulties affording the necessities of life, that discretionary spending on things like cigarettes, there’s a bit of pressure on it,” the NSW Crime Commission’s Darren Bennett told the Herald.

The Crime Commission’s executive director of operations Darren Bennett says large organised crime groups are involved in the illicit tobacco trade. Credit: Sitthixay Ditthavong

The Crime Commission is one of the many government agencies involved in the state’s battle against illegal tobacco, which also includes NSW Police, NSW Health, Australian Border Force and the Australian Federal Police.

Much of the illicit loose tobacco in Australia is home-grown, while most illegal cigarettes come from China. Those cigarettes are either counterfeits of cigarettes sold here or brands not available in Australia. Because they are smuggled in through Australia’s porous border, importers do not pay the tobacco excise – currently $1.40 per cigarette – and lack the barcode, plain packaging and health messaging on their legal counterparts.

They are also significantly cheaper, sold through the convenience stores that have become ubiquitous in Sydney.

Estimates have the cost price of a packet of illegal smokes as low as $2, providing both a significant profit for the importers and a cheaper product for the consumer.

“Organised crime are filling some of that void. They’re able to provide cigarettes between $10 and $25 a packet rather than between $40 and $65 a packet,” Bennett said.

NSW Premier Chris Minns in June came out swinging at the Commonwealth tobacco excise – which is indexed and also being increased by 5 per cent each year for a three-year period starting in 2023 – saying it should be reconsidered.

On Wednesday, the state government introduced what it describes as “tough new laws” to parliament. The sweeping new legislation is designed to penalise selling illegal tobacco, and would allow evictions of retailers selling illegal tobacco, business shutdowns and fines of up to $1.5 million.

‘As lucrative as illegal drugs’

Sydney’s criminal milieu has long been keen to meet the city’s ravenous appetite for illicit drugs; anecdotal evidence suggests that major players such as the Alameddine crime family can earn up to $1 million a week in profit.

Despite these eye-watering profits, criminal groups are increasingly looking to illegal tobacco, says Bennett.

A briefing to Police Minister Yasmin Catley, seen by this masthead, suggests players “responsible for violence in Victoria” have moved into NSW and aligned themselves with “known actors”. Asian and Middle Eastern organised crime groups have also become involved in the illicit tobacco trade, the briefing says.

Australian Border Force officers with a container of illegal cigarettes. Credit: Luis Enrique Ascui

There are two reasons for this – illegal tobacco has a much larger potential market than illicit drugs, and the penalties for importing or selling illicit smokes are considerably lighter than for drugs.

“Large organised crime groups that have traditionally been involved in drug trafficking, extortion, kidnapping and ransom, they’ve all got an offshoot in illegal tobacco,” Bennett said.

“From what I can see, it’s easily as lucrative as illegal drugs.

“We’re certainly seeing that sort of traditional organised crime tactics around eliminating competition and establishing an area where you can do business.”

Arson attacks, which have authorities particularly concerned because of the proximity of many tobacconists to residential dwellings, have been used in NSW, says the briefing to the police minister. Legitimate retailers have also been targeted by organised crime, who are forced to sell illicit products on behalf of the crime group then are extorted for protection money.

In a matter before the courts, a man allegedly planned to steal almost $1 million in cash from the home of a NSW tobacconist in November last year.

Documents seen by the Herald allege the man used a device to track multiple cars and was heard on a phone tap discussing kidnapping people, dressing up as a police officer to orchestrate a vehicle stop or breaking into storage sheds.

Police tracking the man and his co-accused stymied the alleged plot before the money – which police say is profits from illegal tobacco – could be stolen.

He cannot be identified for legal reasons.

Cigarettes are sold virtually everywhere, in all types of retailers. Credit: Sam Mooy

In a separate case, an alleged tobacco runner had his big toe partially severed; in another instance last year, a tobacconist business was burnt to the ground.

Bennett said it could be difficult to discern if this extreme violence was born of illegal drugs or tobacco, but “more frequently we’re finding from our intelligence base and from talking to the police, and talking to victims and talking to offenders, that the motivation is illegal tobacco”.

The business of illicit tobacco has ensnared a huge number of seemingly everyday people – such as the Sydney woman with $2 million in the boot, now before the courts on two counts of dealing with the proceeds of crime – whose alleged role is to move huge volumes of cash, cigarettes and tobacco up and down the eastern seaboard.

In January, a truck driver was caught in one of the north shore’s most moneyed suburbs, allegedly with $1 million in the back of his truck.

The money was seized by the Crime Commission and he remains before the courts on proceeds of crime offences.

That man, too, cannot be identified.

Bennett said the NSW Police have been “very active, very busy” both in vehicle stops of the type that allegedly both foiled the truck driver and the Sydney woman, and in their ongoing fight against organised crime.

“On a local [police station] level is where you get that short-term information based around storage sheds or vehicle movements,” which have led to “quite a few” seizures north of $1 million, Bennett said.

Police are heavily involved in stopping illegal tobacco, but debate has raged over exactly who should regulate it.

While NSW Health is the lead agency, it is ill equipped to take on the underworld. Minns has said he doesn’t want police taken away from the fight against domestic violence and organised crime.

Commercial implications

Independent MP Jacqui Scruby has proposed exclusion zones around schools for tobacconists. Credit: Janie Barrett

Then there is the question of the place of illegal tobacconists in the commercial landscape.

On Penrith’s main street, there are four within a 50-metre radius. Dozens more feature along the suburb’s main strip. On the other side of the city, tourists alighting from the famous Manly ferry pass three as they walk the 450 metres down the Corso to the beach.

“There’s a massive capital investment going into illegal tobacco sales,” Bennett said, something that has alarmed many communities.

Independent MP for Pittwater Jacqui Scruby has been agitating for more action on illegal tobacconists, and says there is “real fear” in the community because of tobacconists’ links to organised crime.

She says legitimate businesses are being pushed out, neighbouring business owners have seen an increase in insurance premiums because of the risk of firebombs, and people living near or above those shops are concerned about being caught in the crossfire.

Scruby has made a number of submissions to a parliamentary inquiry, including buffer zones to prohibit businesses around schools and playgrounds, tougher penalties and moving the responsibility for enforcement to a “better resourced” interagency taskforce.

But with illegal tobacco being sold in plain sight, issues with regulation and the sheer volume of illicit smokes for sale, the problem for government remains diabolical.

“Everyone’s got a stake in stopping this and that’s got to start with people not buying it,” Bennett says firmly.

“But whether Joe Average is willing to pay double or triple what they can pay to mitigate the organised crime aspect of it remains to be seen.”

Source: https://www.smh.com.au/national/the-woman-with-2m-cash-in-her-boot-and-the-violent-trade-as-lucrative-as-drugs-20250718-p5mg1f.html

[Habanoschris]

6 Billion 🤯

[Mike Mecklenburg]

Good report, thanks.

[riderpride]

The market always finds a way. Any further enforcement will only drive it further underground and put the average joe in a line with meth addicts. 

Now, who's interest is the government acting in? 

Cheers!