Two Presentations, One Crisis: When the Evidence Points Beyond Enforcement

Watching James Martin’s presentation alongside Cheneal Puljević’s is fascinating because they are not really arguing about whether Australia has an illicit tobacco crisis. On that, there is remarkably little disagreement. They agree that the illicit market has become enormous, that organised crime is profiting from it, that legal tobacco has lost substantial market share, that the pharmacy vaping model is failing to attract most people who vape, and that Australia needs to make lower-risk alternatives more accessible. Where they part company is over a much more uncomfortable question: what created the economic conditions that allowed this market to become so large, and can Australia realistically enforce its way out of them?

That difference matters because these presentations are looking at essentially the same problem from two different directions. Puljević approaches it largely through the experiences of 50 consumers of illicit tobacco. Martin approaches it through a survey of 4,000 people who had used nicotine in the previous month, conducted in March 2025, alongside a criminological analysis of illicit markets. Put the two presentations together and something important happens. The consumer evidence tells us why people participate in the market. Martin’s analysis asks what happens when governments attempt to suppress a market of this scale without changing the incentives that created it.

Puljević’s presentation contains some extraordinarily important findings. Her participants repeatedly say price is the major reason they buy illicit cigarettes. They describe legal cigarettes as simply too expensive compared with illicit products selling for perhaps $5, $8 or $10 a packet. They describe illicit tobacco as readily available and increasingly normal. Some express anger about taxation and government paternalism. Most importantly from a harm-reduction perspective, Puljević acknowledges that some people who had been vaping have returned to smoking because vaping has become harder or more expensive to access. She calls that a “policy failure” and explicitly acknowledges that vaping is much less harmful than smoking.

That is an enormously important admission.

But Puljević and Martin diverge when they reach taxation. Puljević argues against substantially reducing tobacco taxes, saying illicit cigarettes would probably remain cheaper and that consumers repeatedly indicate they will choose the cheaper product even where the difference is relatively small. Her preferred response therefore combines enforcement, pausing further tax increases, better public education, greater cessation support, cheaper or free nicotine replacement therapy and measures such as track-and-trace.

Martin sees a more fundamental economic problem. His argument is not that enforcement should disappear or that reducing excise would magically eliminate the black market. He argues that enforcement becomes extraordinarily difficult when government policy simultaneously maintains the conditions that make the illicit market so profitable.

His metaphor captures the problem brilliantly: there is little point directing the “fire hose” of law enforcement at the black market while directing a “gasoline hose” at the same problem.

Martin’s survey suggests just how far Australia has travelled down this road. Among surveyed past-month nicotine consumers, close to half of manufactured-cigarette purchasers had purchased an illicit product, while the proportion was above 60 per cent for roll-your-own tobacco. For vapes, his estimate was an extraordinary 95.7 per cent illicit.

That last number should stop us in our tracks.

Australia has constructed an elaborate pharmacy-only vaping system supposedly designed to provide smokers with access to a substantially less harmful alternative. Yet Martin points out that, among a population of roughly 1.5 million people who vape, pharmacies are dispensing only thousands of vapes nationally each month. His conclusion is refreshingly straightforward: the scheme is “not working as intended.”

This is where Martin’s presentation becomes particularly powerful because he does something that is too often missing from Australian tobacco policy debates: he treats consumers as people whose behaviour responds to incentives rather than as pieces on a regulatory chessboard.

People who vape have preferences. Adults like fruit and dessert flavours too. Smokers want satisfying alternatives. Consumers care about price, convenience and availability. Making a product legal in theory does not create a functioning legal market if the regulated product is unattractive, difficult to obtain or fundamentally different from what consumers actually want.

When the legal market fails to meet demand, the demand does not necessarily disappear.

Someone else meets it.

In Australia, increasingly, that someone appears to be the black market.

Martin estimates annual expenditure on illicit nicotine products at approximately $7.7 billion. According to his analysis, illicit nicotine now represents roughly 40 per cent of Australia’s illicit drug economy and is worth more than cannabis, cocaine, heroin and ecstasy combined.

Think about the implications of that.

We are no longer talking about a few tobacconists quietly selling cheap cigarettes under the counter. We are talking about an illicit consumer market sufficiently large to attract sophisticated organised crime, generate extraordinary profits, corrupt supply chains, create risks for regulatory agencies and contribute to violence.

Martin’s criminological comparison with conventional drug enforcement is therefore particularly important. He notes that Australia has dramatically increased expenditure on drug law enforcement over roughly the past 15 years, accompanied by record arrests and seizures. Yet he argues that these achievements have done remarkably little to change the underlying availability of major illicit drugs. In some cases purity has increased while inflation-adjusted prices have fallen.

That history should make us cautious about believing that enough raids, seizures and store closures will necessarily solve the tobacco problem.

Martin is not saying enforcement does nothing. He explicitly leaves open the possibility that sufficiently large and sustained enforcement could suppress overt retailing. But then he asks the question that really matters: what happens to the demand?

Does it disappear?

Or does it move?

The answer matters enormously because the illicit vaping market already gives us a glimpse of what displacement looks like. Martin finds independent sellers playing a much larger role in illicit vape supply than in illicit cigarette supply. He suggests this may illustrate what happens as a market becomes more explicitly illegal.

The shop disappears.

The customer does not.

The transaction simply moves somewhere harder to see.

That could mean independent sellers, social networks or online markets. As enforcement becomes more successful against visible tobacconists, Australia may discover that it has not eliminated the market at all. It has merely pushed it from a relatively observable retail environment into increasingly closed criminal distribution networks.

Puljević herself recognises part of this problem. Her consumers say illicit tobacco is extremely easy to find. If one tobacconist runs out, they go to another. Queensland’s store closures appear to have temporarily made products harder to obtain, and she points to increased Quitline calls as encouraging evidence. That deserves attention. Enforcement can undoubtedly create friction.

But Martin asks the longer-term question: how much enforcement would be required to maintain that friction across a market serving millions of nicotine consumers?

And at what cost?

This is where the scale becomes critical. Martin contrasts nicotine with Australia’s heroin market. He notes that the Australian heroin drought is an example where enforcement may genuinely have reduced supply, raised prices and lowered purity. But the heroin-using population involved was tiny compared with nicotine. Australia now has more than three million nicotine consumers, according to the figures Martin presents, with a majority sourcing at least some products through illicit channels.

Suppressing a niche illicit drug market and suppressing something used routinely by millions of Australians are completely different law-enforcement propositions.

There is another finding in Martin’s research that challenges a comfortable assumption about tobacco taxation. Illicit purchasing is not confined to disadvantaged Australians. His survey finds substantial illicit purchasing across socioeconomic groups and household incomes. Even among respondents with household incomes above $200,000, illicit purchasing remains extremely high.

That suggests something deeper than simple inability to pay.

At some point, the legal price can become so detached from the alternative price that consumers across income groups reject it.

Puljević’s interviews reinforce this differently. Consumers do talk about financial pressure, but they also talk about resentment. Some no longer regard avoiding tobacco excise as particularly morally problematic. Illicit purchasing becomes normalised.

That should concern policymakers enormously because taxation ultimately relies on more than enforcement. It relies upon sufficient public compliance for the system to remain workable.

Martin goes further than Puljević on what this means for excise. He believes the tax increases themselves have driven the expansion of the illicit market and says this outcome was predicted years ago. Perhaps the most troubling part of his account is his explanation for why those warnings received insufficient attention: the conclusions resembled arguments being made by the tobacco industry.

This is where the story becomes bigger than tobacco taxation.

Evidence does not become false because the wrong person once said something similar.

If independent criminologists warn that extreme price differentials are likely to create an organised black market, the appropriate response is to examine the evidence. Dismissing the warning because tobacco companies have also complained about excise does not make the economic mechanism disappear.

Reality does not perform funding checks before behaving.

And now Australia is confronting the consequences.

There is, however, one area where these two presentations come surprisingly close together, and it may ultimately be the most important part of both.

Safer nicotine alternatives.

Puljević’s consumers themselves raise the idea. One says people need multiple non-combustible choices. Another says simply: “Legalise vaping. That’s how you get people to quit cigarettes.”

Martin arrives at essentially the same conclusion from criminology.

He compares Australia with New Zealand and the United Kingdom, where smokers can have much easier access to vaping as an alternative to cigarettes, and asks the obvious question: why does Australia make vaping harder to obtain than smoking?

It is difficult to give a convincing answer.

A cigarette is the product responsible for the overwhelming majority of nicotine-related death and disease. Yet an Australian adult can walk into an ordinary retailer and buy cigarettes while access to a substantially lower-risk alternative is channelled through pharmacies and surrounded by restrictions that have evidently failed to attract the overwhelming majority of existing consumers.

The result, according to Martin’s estimate, is around $1.6 billion flowing into illicit vapes.

This is where tobacco harm reduction and criminology suddenly become allies.

Every person purchasing a regulated vape instead of an illicit vape is one less customer for the black market.

Every smoker who switches completely from cigarettes to a substantially lower-risk nicotine product potentially reduces their health risk while also reducing demand for combustible tobacco.

Every dollar transferred from organised crime into a legitimate, regulated nicotine market is a dollar that can be taxed, regulated and subjected to product standards.

This is not choosing public health over law enforcement.

It is using public health to make the law-enforcement problem smaller.

And that may be the most important difference between the two presentations. Puljević largely asks how we can discourage consumers from participating in the illicit tobacco market. Martin asks how we can redesign the market so fewer consumers want or need to participate in it in the first place.

We probably need elements of both.

There should be enforcement against organised crime. There should be action against businesses openly selling illegal products. There should be better border intelligence. There should be effective cessation support. Nobody should pretend that simply changing one tax or legalising one alternative will make sophisticated criminal organisations disappear overnight.

But enforcement should be the backstop of a workable regulatory system, not the mechanism holding an economically dysfunctional system together.

The most powerful lesson from these two presentations emerges precisely because they approach the issue differently.

One talks to consumers.

The other studies the market.

The consumers say price matters. They say availability matters. They say choice matters. Some say vaping helped or could help them move away from cigarettes. Some are returning to smoking because vaping has become harder to access.

The market tells essentially the same story.

Illicit cigarettes flourish because the potential profits are enormous. Illicit vapes dominate because the legal channel has failed to meet consumer demand. Organised crime enters because billions of dollars are available. Enforcement struggles because millions of consumers remain willing to buy the products.

Australia can keep treating each of these as a separate problem.

A tobacco problem.

A vaping problem.

An organised-crime problem.

A border problem.

A taxation problem.

A public-health problem.

But increasingly they look like different symptoms of the same policy architecture.

Perhaps the most important sentence in Puljević’s presentation is her acknowledgement that people have switched from vaping back to smoking because vapes became harder or more expensive to obtain, calling that a policy failure.

And perhaps the most important sentence in Martin’s presentation is even simpler:

“Here we make vapes harder to get than cigarettes, which just doesn’t make any sense from either a criminological perspective or, I would argue, a health perspective as well.”

Put those two statements beside each other.

Two researchers approaching the problem from different directions arrive at essentially the same uncomfortable point.

Australia has made the most dangerous nicotine product extraordinarily expensive but universally available, while making a substantially less harmful alternative considerably harder to obtain legally.

Organised crime has stepped into the gap.

The question now is not whether Australia can make more arrests, seize more cigarettes or close more tobacconists. It undoubtedly can.

The question is whether those actions change the market that keeps replacing everything authorities remove.

Because when demand remains measured in millions of consumers, and criminal revenue is measured in billions of dollars, enforcement is fighting economics.

The more durable solution is to change the economics.

Shrink the illicit market. Give adults attractive legal alternatives. Regulate according to risk. Make safer products easier to obtain than cigarettes, not harder. Then concentrate law enforcement resources on the smaller criminal market that remains.

That is not surrendering to the black market.

It is finally understanding how to defeat it.