More than half of Australians aged 18–24 who smoke are purchasing illegal tobacco products, making young adults the most active black-market age group at the same time as their smoking rates fall to record lows.

The Australian Institute of Health and Welfare (AIHW) has found 56 per cent of smokers in the age range have recently bought or used illicit tobacco—well above the national figure of 34 per cent for all smokers.

Another study by researchers from Cancer Council NSW, the Daffodil Centre and the University of Sydney in May surveyed 232 young adults who smoke about their respective habits. The study found 81.7 per cent of tobacconist purchases were classified as likely illicit. 

For convenience stores, milk bars and corner shops, 81.4 per cent were illegal, and 20.8 per cent of supermarket transactions were classified as likely illicit.

The AIHW findings were released as Victoria's new tobacco regulator continues to operate with 14 licensing inspectors covering an estimated 8,000 retailers.

The survey was conducted between June and December last year, with more than 17,500 respondents aged 14 and over. Released in July, its headline result was that daily smoking had continued to decline to 5.6 per cent, down from 8.3 per cent in 2022-23 and 19.5 per cent in 2001.

Tobacconists have become the centre of the trade. The AIHW found 57 per cent of people who bought branded illicit tobacco did so at a tobacconist, followed by local convenience stores at 14 per cent. Tobacconists are now the most common source of all tobacco for people who smoke (47 per cent), more than double the share bought at major supermarkets.

Respondents attributed high prices as the reason for subverting legal channels. Tobacco products in Australia are subject to some of the highest relative tax globally, at $1.53, increasing to $1.55 per stick this September (~ $31 for a 20 pack).

“I refuse to buy legal cigarettes. I sell cigarettes at a bottle shop; the cheapest one we have is $35. I get my cigarettes for $10 a pack, so obviously I’m going to be buying the illegal ones, they’re so cheap,” a 19-year-old participant said.

Since July 2024, the only legal pathway to buy a vape has been through a participating pharmacy or prescription. The AIHW found 2.5 per cent of people using e-cigarettes had obtained them from a physical pharmacy and 4.8 per cent from an online pharmacy. The remaining 93 per cent obtained them from an illicit source, most often a tobacconist.

Vaping among 18–24 year olds has fallen to 14 per cent in 2025, down from 20.6 per cent in 2022-23.

Perhaps unsurprisingly, Oral nicotine pouches (Zyns), were used by 8.4 per cent of young adults, over four times the national average. 

Pouches cannot be lawfully sold in Australia. On 24 July this year, a month before the detailed data was released, the Therapeutic Goods Administration closed the last remaining legal pathway. Consumers can no longer import pouches personally, obtain them under the Special Access or Authorised Prescriber schemes or have them compounded by a pharmacist.

Victoria began licensing tobacco retailers on 1 July 2025, before enforcing it on 1 February this year. Tobacco Licensing Victoria (TLV) began enforcement with 14 licensing inspectors for the estimated 8,000 state retailers.

In its submission to the Senate inquiry into this bill, the city of Stonnington noted that inspectors were required to conduct visits in pairs for their safety, leaving seven teams to cover the entire state.

The Victorian scheme does not cover vapes, e-cigarettes or nicotine pouches, which are regulated federally.

In its first month of enforcement, TLV seized about $5 million worth of illegal tobacco, including 3.19 million cigarettes and 40 kilograms of loose-leaf tobacco. By the start of enforcement it had received more than 4,100 licence applications and granted more than 2,000.

Currently, regulators lack closure powers. Recently introduced to the State Parliament in June, the legislation gives TLV and Victoria Police the power to issue closure notices of up to 90 days, and courts the power to order longer closures. It would also allow landlords to terminate leases and create penalties for landlords who knowingly permit illicit sales.

New South Wales has held those powers since November 2025. By 6 February this year, NSW Health inspectors and police had closed 66 stores. In one Inner West operation they seized approximately 780,000 illicit cigarettes and 2,200 illicit vapes across five premises.

The Public Health Association of Australia used the release of the data to call for a reduction in the number of tobacco retailer licences.

“We urge [parties to] take one more step and move to dramatically reduce the number of tobacco retailer licenses,” said CEO of the PHAA Terry Slevin.

There are an estimated 40,000 tobacco retailers nationwide. Overseas, Hungary restricted sales to licensed shops at a ratio of one for every 2,000 residents in 2013, and outlet density fell by roughly 85 per cent. The Netherlands is working to reduce its retailers from 16,000 to 6,000.

The AIHW found 67 per cent of Australians support reducing the number of places tobacco can be bought. Support for a national retailer licensing scheme rose to 76 per cent from 68 per cent.

Support for raising tobacco tax fell. It ranged from 59.9–64.3 per cent depending on the stated purpose, the lowest level recorded since 2004. Cost remained the most common reason people gave for quitting or cutting down, at 48 per cent, down from 53 per cent.

The Australian Taxation Office put illicit tobacco at about 25 per cent of the market in 2023–24. The Illicit Tobacco and E-cigarette Commissioner estimated 55 per cent in 2024–25, within a range of 50–60 per cent, worth $5.6 billion and representing between $7.7 billion and $11.8 billion in evaded excise.

In June, the ABS published experimental estimates based on nicotine traces in wastewater, putting illicit consumption at 80 per cent of the total in 2025, up from 12 per cent in 2017. The method cannot distinguish between nicotine from cigarettes, vapes and pouches.

The same analysis found the quantity of nicotine consumed in Australia rose by almost 40 per cent between 2017 and 2025. The population grew 14 per cent over the same period.

Tobacco excise revenue peaked at about $16 billion in 2019-20. This year's federal budget forecast $3.56 billion for 2026-27 and revised the take down by $8 billion over five years.

Image source: Cancer Research UK