The War on Nicotine Is Creating the Crime It Claims to Fight

More of the Same!

https://www.abc.net.au/news/2026-03-19/tobacco-crime-law-changes-for-illegal-vape-cigarette-market/106469048

Australia’s latest crackdown on illicit tobacco and vapes is being framed as a decisive strike against organised crime. Authorities promise tougher penalties, expanded surveillance powers, more raids, and greater coordination between law enforcement agencies. The message is clear: the government is determined to crush the booming black market in nicotine products.

But there is a deeper problem hiding beneath the headlines. The crackdown increasingly looks like an attempt to treat the symptoms of a policy failure rather than the cause.

According to recent estimates cited by authorities, more than half of all tobacco sold in Australia is now illegal. Criminal networks are reportedly making between $4.1 billion and $6.9 billion each year from the illicit trade. At the same time, an extraordinary 95.7% of e-cigarette products sold in Australia are illegal.

Those numbers should stop policymakers in their tracks. When the majority of a market becomes illegal, the problem is no longer simply organised crime. The problem is that the regulatory framework itself has collapsed.

A functioning regulatory system does not produce a situation where almost every product people are using exists outside the law. When that happens, it signals that the gap between legal supply and consumer demand has become so wide that illicit markets inevitably rush in to fill it.

This is precisely what has happened with nicotine in Australia.

For years, tobacco taxes have been pushed to some of the highest levels in the world. A single packet of cigarettes can now cost more than $40. While the policy has often been justified as a way to discourage smoking, it has also created enormous financial incentives for smuggling and illegal distribution. When a legal product becomes extraordinarily expensive, the profit margin for supplying it illegally becomes irresistible.

Even the government has begun to acknowledge part of this reality. Assistant Minister Julian Hill recently admitted that high tobacco excise has been “one of the key drivers” of the illicit market.

Yet despite this admission, the proposed solution is not to reconsider the policy settings that created those incentives. Instead, the response is to double down on enforcement, tougher penalties, broader police powers, and a greater focus on cracking down on suppliers.

This approach treats the black market as a law-enforcement problem alone. In reality, it is an economic one.

History shows that prohibition-style policies rarely eliminate demand. When governments attempt to restrict access to products that large numbers of people still want, markets rarely disappear. They simply move underground.

Once that happens, the consequences become predictable. Products are no longer regulated. Criminal networks step in to manage supply. Violence and corruption follow the profits. And consumers become accustomed to operating outside the law simply to obtain something they previously bought legally.

Australia’s nicotine market is beginning to resemble exactly that pattern.

The situation with vaping is perhaps the clearest example. Rather than regulating nicotine vaping products through normal retail channels, Australia has effectively banned their sale outside of pharmacies. Consumers must navigate a complex system involving prescriptions and limited pharmacy supply, a model that bears little resemblance to how vaping operates in most other countries.

The result is that the overwhelming majority of vape products in Australia are now sold illegally.

This should not have been surprising. Millions of adult smokers remain addicted to nicotine. Many are looking for alternatives that are less harmful than cigarettes. When legal retail channels are closed or made extremely difficult to access, demand does not disappear. Instead, consumers turn to the easiest and most accessible option available — the illicit market.

Ironically, the policies designed to tightly control vaping have ended up removing almost all meaningful regulatory oversight.

In a legal market, governments can impose product standards, ingredient controls, labelling requirements, and age-verification systems. In an illegal market, none of those protections exists. Consumers have no assurance about what they are buying, and authorities have little visibility over the supply chain.

Meanwhile, organised crime enjoys the profits.

The broader paradox is difficult to ignore. Policies introduced in the name of public health are now helping to fuel one of the largest illicit nicotine markets in the developed world. Billions of dollars that might otherwise circulate in the legal economy are instead flowing into criminal networks.

At the same time, enforcement efforts are becoming increasingly costly and intrusive. Police resources are diverted toward raids and investigations. Governments expand surveillance powers. New offences are created, and penalties are increased. Yet despite these escalating efforts, the illicit market continues to grow.

This cycle should look familiar. It is the classic pattern seen whenever prohibition collides with persistent consumer demand. Enforcement intensifies, but the underlying market remains intact because the economic incentives have not changed.

A different path exists, and other countries have already taken it.

Rather than prohibiting safer nicotine alternatives, nations such as the United Kingdom and New Zealand have chosen to regulate them. Vaping products are legal, subject to product standards, and widely available through normal retail channels. These systems aim to reduce smoking while keeping nicotine markets largely within the legal economy.

The goal is not to eliminate nicotine overnight. It is to reduce harm and maintain regulatory control.

Australia has taken the opposite approach. Instead of integrating vaping into a regulated consumer market, policymakers have effectively attempted to suppress it.

The result has not been the disappearance of vaping. It has been the near-total migration of the market into illegality.

Faced with this reality, the government’s latest crackdown risks becoming an expensive and never-ending game of whack-a-mole. Criminal networks adapt quickly. When one supply route is disrupted, another emerges. When penalties increase, profits rise to compensate for the risk.

As long as the gap between legal access and consumer demand remains wide, the illicit market will continue to regenerate.

This does not mean enforcement has no role to play. Criminal networks engaged in violence and large-scale smuggling should absolutely face legal consequences. But enforcement alone cannot fix a market that policy itself has distorted.

Real solutions require confronting the uncomfortable possibility that some of the current policy settings may be contributing to the very problem they are meant to solve.

Extreme taxation, prohibition of safer alternatives, and overly restrictive regulation have combined to create powerful incentives for illegal supply. Ignoring those incentives while escalating enforcement risks repeating the same cycle indefinitely.

If policymakers genuinely want to weaken organised crime in the nicotine market, they may eventually have to consider a more pragmatic approach, one that reduces the size of the illicit market by bringing more of it back into the legal, regulated economy.

Until then, each new crackdown will likely produce the same outcome: impressive headlines, dramatic raids, and a black market that quietly continues to grow.