The Australian government has spent the last decade introducing steep tax hikes to curb smoking, and, as a result, the country has the most expensive cigarettes in the world. The average price of mainstream cigarettes is 54.99 Australian dollars per pack (about $40). But the eyewatering prices have driven people to the black market.
In 2025, an estimated 80 percent of the tobacco consumed in Australia was illegal, up from 12 percent in 2017, according to new analysis from the Australian Bureau of Statistics (ABS). The study, which is the first attempt by the Australian government to estimate the size of the black market, found that “prices for legal tobacco products have almost tripled since December 2016 driven by annual tobacco excise increases, while estimated prices of illicit tobacco products have remained relatively constant.” Since 2020, household spending on legal cigarettes and tobacco has almost halved, but between 2017 and 2025, the amount of nicotine consumed in Australia has risen by almost 40 percent.
Meanwhile, between 2016 and 2025, the price of legal cigarettes nearly tripled while tobacco duty revenue more than halved. As a result, the Australian Treasury has downgraded tobacco excise revenue by $8 billion over the next five years in the latest federal budget.
Lower tax revenue is hardly something to mourn, but Australia’s collapsing legal tobacco market has come with a far darker consequence: a severe wave of gang violence, including firebombings and shootings. Since 2023, organized crime groups linked to Australia’s illicit tobacco and vape market have been tied to “more than 200 firebombings,” “at least 3 homicides,” and “multiple other non-fatal violent attacks,” according to the Australian Intelligence Commission.
“It’s hard to see how it could get any worse,” Rohan Pike, a former Australian Federal Police detective and Border Force member, tells Reason. Pike, who created and led Australia’s Illicit Tobacco Strike Team, says the violence is now an “old-fashioned turf war” and that criminal gangs, attracted by the profits, are fighting to control distribution.
Pike says criminal groups are opening pop-up convenience stores, intimidating legitimate retailers into selling their products, and backing up those threats with “firebombings and other types of violence.” Organized crime syndicates have destroyed hundreds of tobacconists, convenience stores, and hospitality venues, forcing legitimate businesses out. “Every part of the tobacco control policy is uncontrolled at the moment,” says Pike.
Public awareness of the black market rose last year when Katie Tangey, a “completely innocent” 27-year-old woman, was killed in Melbourne in a case of mistaken identity linked to the tobacco wars. “We know it is linked to the illegal tobacco trade. That’s one thing we can say with a high degree of certainty,” Detective Inspector Chris Murray told the Australian Broadcasting Corporation. “This was always our fear, that someone would die as a result of the tobacco wars and unfortunately this has come to fruition.”
Hellbound and Down 