NSW Government introduces changes to tackle illegal tobacco: licensing scheme for retailers - tougher penalties to be introduced
The NSW Government will roll out the amendments to better protect the community from the harms of illegal tobacco, including tougher penalties, more enforcement officers, and a new tobacco licensing scheme for retailers.
A new licensing scheme
Recent enforcement activities have observed a rise in illicit tobacco retailing including amongst rural communities in NSW, which adversely affects businesses that operate within the law. Illicit retailers undercut legitimate small businesses by selling illicit tobacco at lower prices and some have been found to be located in close proximity to schools.
A new tobacco licensing scheme will also be introduced, to better protect those businesses doing the right thing and ensure greater oversight of the tobacco retail industry in NSW.
Under these changes, retailers and wholesalers of tobacco and non-tobacco smoking products will be required to hold a tobacco licence and pay an annual fee.
A licence will be able to be refused, or revoked, if the applicant has been convicted of a tobacco or vaping product related offence.
The scheme will support comprehensive and targeted enforcement to identify and penalise those retailers and wholesalers doing the wrong thing.
The proposed legislation includes penalties of up to $220,000 for corporations and $44,000 for individuals for selling tobacco without a licence under the new scheme.
To ensure that applying for a tobacco licence is not burdensome for small businesses, a technical support phoneline will be available to everyone submitting an application.
The Government states a tobacco licensing scheme will complement it’s broader approach to tobacco compliance and enforcement.
Tougher penalties
The government will double maximum penalties for a range of tobacco retailing offences, including:
- individuals selling tobacco products to minors will be fined up to $22,000 for a first offence and $110,000 for a subsequent offence, with corporations liable for up to $110,000 for a first offence and $220,000 for subsequent offences
- individuals selling tobacco products not in the required packaging or with the mandatory health warnings will be fined up to $22,000, and corporations up to $110,000
- people impersonating or obstructing an inspector can be fined up to $1,100, up from $550.
Enforcement & seizures
NSW Health will also recruit an additional 14 enforcement officers to strengthen compliance efforts across the state. This doubles the number of authorised inspectors employed by the Ministry of Health. Ahead of these reforms, NSW Health boosted regional enforcement capacity by supporting the employment of four additional enforcement officers. This compliance workforce complements authorised staff who undertake inspections across local health districts.
From 1 July 2024 to 30 September 2024, NSW Health inspectors conducted 565 targeted retail inspections, seizing more than 3.2 million cigarettes and over 600kg of other illicit tobacco products, with an estimated value of over $3.7 million.
NSW Health collaborates with NSW Police and other state and national regulatory agencies on enforcement related to illicit tobacco sales, including sharing intelligence, working on joint targets and joint operations.
Information on NSW tobacco retailing laws can be found on the NSW Health website.
Members of the public are encouraged to report suspected breaches of tobacco and e-cigarette retailing laws on the NSW Health website.
Minister for Health, Ryan Park MP stated on Thursday:
“I am very concerned by the prevalence of illegal tobacco and e-cigarettes in our community, and their proximity to our schools and children."
“These new laws are the most significant tobacco retailing reforms in NSW in the last decade and will help us combat the scourge of illicit tobacco sales across the state."
“We are introducing tougher penalties for retailers doing the wrong thing, and boosting our team of enforcement officers to strengthen our compliance efforts."
“The increased tobacco penalties reflect the seriousness of these offences. Retailers should be put on notice that if they are caught breaking tobacco retailing laws they will be penalised.”
“A tobacco licensing scheme in NSW will also further enhance our state’s strong approach to enforcement of tobacco retailing laws. It will allow us to have better oversight over the tobacco industry and will support our comprehensive approach to help reduce the use, impact and associated costs of tobacco in NSW.”
Member for Wagga Wagga Joe McGirr MP said:
“After being made aware of the escalating problem of illegal tobacco in my electorate and across the state, I prepared a Private Members’ Bill to require the licensing of tobacco retailers and increased penalties for offences."
“This Bill was prepared with widespread consultation with industry and the community, with strong support for my proposals to tackle this growing criminal activity which is undermining health messaging and taking an expensive toll on legitimate retailers."
“So, I am delighted that the government has met this challenge by proposing its own Bill, reflecting the content of my Bill, and I look forward to supporting the government in this endeavour when parliament resumes."
“Licensing on its own will not eliminate the black market trade in tobacco but it will provide a valuable structure that will help to reduce the damaging effects of this rapidly-growing problem."
“I congratulate the government for taking this strong proactive stance and I look forward to working together on further steps to tackle the illegal tobacco trade.”
NSW Health Chief Health Officer Dr Kerry Chant said:
“NSW Health supports a holistic approach to tobacco control, recognising reducing supply and access to illicit products is one component."
“Operating a tobacco licensing scheme will ensure NSW Health has accurate, up-to-date information on tobacco retailing and wholesaling activities in NSW, facilitating more efficient and effective enforcement activity."
“If you think a tobacco or e-cigarette retailing law has been broken by a retailer in NSW, you can report this via the NSW Health website.”
On the same day the Opposition called for a Parliamentary Inquiry into the illegal tobacco (“chop chop”) trade in NSW.
'This inquiry would cover, but not be limited to, organised crime links to the illegal tobacco trade in NSW, departmental responsibility for enforcement, licensing schemes for tobacconists, landlord responsibilities, increasing penalties, money laundering schemes operating via tobacconists, improved education and public awareness.' the NSW Liberals said
Shadow Health Minister Kellie Sloane said 'we are seeing an alarming increase in the supply of illegal tobacco in NSW, which has been linked to organised crime syndicates'.
“Profits from illegal tobacco sales are lining the pockets of criminals, with the growing trade estimated to be worth billions in Australia. This inquiry will give parliament the opportunity to hear from experts, small businesses, health professionals and law enforcement to ensure we have the right legislation in NSW to crack down on this illegal trade,” said Ms Sloane.
“We know that users of illegal tobacco report significantly worse health outcomes than smokers of legal tobacco[1], and given the lower cost and easy access to illegal tobacco, NSW is at risk of going backwards on fifty years of public health progress in reducing nicotine and smoking rates.”
Shadow Minister for Regional Health Gurmesh Singh said the illegal tobacco trade is putting pressure on small businesses across New South Wales, especially in the regions.
“The regulation of the tobacco industry has been a cornerstone of our health response to smoking for decades. It’s important to our communities to have an open inquiry into the illegal aspects of this industry.”
NSW Health data shows there has been an increase in the number of tobacconists opening, rising from 14,500 four years ago to 19,500 today.
NSW is the last state to either introduce a licensing regime specifically for tobacco retailers. The Government's amendments are viewed as a vital step towards quantifying the size of the black market, and controlling the supply chain.
Theo Foukkare, CEO of the Australian Association of Convenience Stores (AACS), welcomed the announcement as a "step in the right direction", adding the changes will "identify the good from the bad actors".
In September 2023 AACS pointed out illegal cigarettes were openly being sold in Melbourne - all in bright packaging unlike that required in Australia, some brands not even available legally here.
They sell for around $15, one-quarter the usual cost, but can contain bulking agents such as twigs, raw cotton and grass clippings. Fungal (mould) spores have also been detected.
A recent report from the George Institute found that in 2022-23, tobacco use was responsible for $159.7 billion in economic and social costs across Australia, comprising treatment and lost productivity costs.
In 2021-22, the number of hospitalisations attributable to smoking in New South Wales was 56,118, or approximately 1.9 per cent of all hospitalisations.
In 2021, 6,614 deaths in New South Wales were attributable to smoking.
Introducing a tobacco licensing scheme is one part of a comprehensive approach to help reduce the use, impact and associated costs of tobacco in New South Wales.