The criminal syndicates behind Victoria’s multibillion-dollar illegal cigarette trade are reportedly devising new strategies to circumvent the state’s impending enforcement of tobacco laws. These plans include selling black market cigarettes through laundromats, hairdressers, and anonymous depots, as well as potentially mixing smuggled cigarettes that comply with plain packaging laws with legal products to disguise their origins.
This development follows the arrest of notorious kingpin Kazem “Kaz” Hamad in Iraq this week. Hamad, who has been orchestrating a violent tobacco war in Victoria from overseas for the past two years, leaves behind a potential power vacuum in the state’s illicit tobacco market. Underworld and industry sources have revealed a series of schemes being considered by these syndicates to evade the anticipated large-scale closures of illegal tobacco shops across the state.
Victoria’s Crackdown on Illicit Tobacco
Victoria’s new tobacco licensing system, set to commence on February 1, marks nearly two years since the crackdown legislation was first proposed and over a year since it was passed by parliament. The government has pledged that this regime will dismantle the business model of organized crime by deploying dedicated inspectors to shut down shops selling illicit tobacco. Individuals caught selling illegal tobacco face fines of up to $366,318 or up to 15 years in jail, while businesses could be fined up to $1.8 million.
According to sources familiar with the operations of the illicit market, syndicates have been preparing for this crackdown, realizing that their “free run” would not last indefinitely. Their plans include distributing illicit tobacco through less conspicuous business fronts, such as local hairdressers, laundromats, cafes, and nondescript warehouses where sales occur by word of mouth.
Challenges and Strategic Shifts
The crackdown coincides with federal efforts to tighten border controls, which are expected to cost syndicates hundreds of millions of dollars. Additionally, banks and financial service providers are increasingly reluctant to offer point-of-sale terminals for credit card transactions to businesses selling illicit products, prompting a shift to cash-only transactions.
Syndicates are also reportedly planning to reduce their reliance on illegal brands like Manchester, which do not meet plain-packaging requirements. Instead, they aim to source legal cigarettes from third parties linked to major tobacco manufacturers, bringing them into the country without paying taxes and selling them in legitimate-looking shops at lower prices.
“They’re going to buy them overseas with the right packaging. They’re going to bring them in without paying the taxes, and they’re going to sell them in shops. Legit shops selling a legit-looking brand that’s actually cheaper. It’s a whole new way to get into the market,” an underworld source explained.
Regulatory and Enforcement Challenges
The newly established Tobacco Licensing Victoria faces significant challenges in controlling the illicit market, which has operated almost unchecked for years. The new rules require any shop selling tobacco to have a license by February 1, but inspectors in Victoria lack the authority to shut down illegal retailers, only to prosecute them.
Delays in appointing a chief operating officer for the enforcement unit and the limited number of enforcement officers—only 14 for a state with approximately 8,000 tobacco retailers—pose additional hurdles. The need for inspectors to travel long distances and the requirement for safety measures during compliance checks further complicate efforts to stamp out the black market.
Police and intelligence sources suggest that hundreds of shops are directly controlled by the Hamad cartel, the dominant force in the illicit tobacco market. Hamad’s arrest in Iraq raises questions about the future operations of his cartel, which has been a significant player in the market since he launched a so-called tobacco war in early 2023.
More than half of the tobacco market in Australia is now believed to be illegally sourced, according to a recent report by the Illicit Tobacco and E-cigarette Commissioner.
Looking Ahead
The enforcement of Victoria’s new tobacco laws represents a significant step in the fight against organized crime, but the road ahead is fraught with challenges. The government’s ability to effectively implement and enforce these laws will be critical in determining the success of this initiative. Meanwhile, the syndicates’ adaptability and resourcefulness continue to pose a formidable challenge to authorities.
As the situation unfolds, the impact of these new laws on the illicit tobacco market and the broader implications for organized crime in Victoria will be closely watched by both the government and the public.
