In a strip of just a dozen shops on a street in Melbourne’s western suburbs, three tobacconists stand clustered. These small businesses are part of a booming and increasingly dangerous tobacco trade that, over the past 18 months, has seen arson attacks, firebombings, and even a foiled attempt at setting one ablaze using a Molotov cocktail.
Eight days after the first incident, a vehicle rammed through the security screen at a second tobacconist store. The attacker abandoned a jerry can on the street—a bold mark of defiance in the ongoing battle. Despite these attacks, most businesses continue to operate, their neon signs flashing as customers come and go, seemingly unphased by the violence.
The incidents are part of a broader, high-stakes conflict stretching across Victoria, threatening what was once one of Australia’s proudest public health achievements: a dramatic reduction in smoking rates. Since the beginning of last year, more than 120 tobacconists have been firebombed across four states, leaving the federal government caught in a difficult position between a thriving black market, an increasingly restrictive public health framework, and embattled law enforcement.
The proliferation of illicit tobacco trade can be traced back nearly a decade, when Australia was a global leader in the fight against smoking. In 2011, Australia introduced plain packaging laws, setting the precedent for public health policies that encouraged a major decline in smoking rates. Excise taxes on legal tobacco also skyrocketed, with taxes on a single cigarette rising from 34 cents in 2011 to $1.37 in 2023, pushing a pack of cigarettes to more than $40.
However, these measures created a loophole for the illegal tobacco trade, making illicit cigarettes – sold at nearly half the price of legal ones – an attractive option for consumers. From suburban storefronts to online platforms, illegal tobacco became readily available. Police assert that the cheap prices and ubiquitous availability of illicit products counteract public health efforts to encourage quitting, fueling a shadow economy worth at least $2 billion a year.
Law enforcement sources indicate that some store owners participate knowingly in the illicit trade, selling smuggled or counterfeit tobacco products. But organized crime groups have also seized the opportunity to capitalize on this lucrative market, igniting a turf war that has now gone nationwide. Police believe that the increasing number of attacks and attempted arsons are part of a coordinated effort by criminal groups to establish dominance over Australia’s tobacco black market.
Senior Sergeant Graham Banks, leading Taskforce Lunar in Victoria, says organized crime groups began investing in tobacconist stores about a decade ago, seeing them as an easy means of making significant profits, especially as excise taxes continued to rise. Each store, according to Banks, can generate roughly $20,000 weekly – over $1 million annually.
In March last year, a meeting between criminal organizations was held to form a coalition to control and set prices for illegal tobacco. Attending this meeting were key figures, including a national leader from an outlaw motorcycle gang and prominent members of Middle Eastern organized crime families. The meeting’s goal was to divide territories and profits fairly, but not all parties were agreeable. Conflict quickly ensued, leading to what has become a violent struggle for control.
At the center of this conflict is Kazem Hamad, a figure well-known within Australia’s criminal underworld. Hamad’s background is marked by violence and hardship. Born in Iraq, Hamad fled with his family to Australia as a refugee in the late 1990s, having endured traumatic experiences from a young age. He later spent much of his youth on the fringes of Melbourne’s rough suburbs, where he became involved in drug use and various criminal activities.
By 2014, Hamad had been charged in a heroin trafficking case by the Australian Federal Police. A judge later described Hamad as deeply entrenched in a life of crime, yet his main ambition remained outside of the narcotics trade. Instead, he operated a network of armed robbers who targeted businesses selling tobacco products, from service stations to retailers. His group stole cigarettes and other goods, which they then resold on the black market, further enriching the illicit trade.
Following his 2019 sentencing, Hamad was deported to Iraq in 2023 but remained actively involved in Australia’s black market tobacco trade, exerting influence through his organized crime syndicate.
Australia’s regulatory approach to tobacco was initially hailed as a model of public health policy. Data from the Australian Bureau of Statistics (ABS) National Health Survey and the Australian Institute of Health and Welfare National Drug Strategy Household Survey (NDSHS) show a significant decline in smoking rates. Daily smoking rates dropped from 12.8% in 2013 to 8.3% in 2022-23, a testament to the effectiveness of plain packaging and high excise taxes.
However, as tobacco smoking declined, vaping became a more popular alternative, particularly among young Australians. Government reports now suggest that up to 12% of Australians either smoke or vape daily, a figure comparable to smoking rates from over a decade ago. This shift to vaping presents new challenges for policymakers, especially as many vaping products sold through illicit channels contain unregulated substances.
In response, Australian authorities have increased restrictions on both legal and illegal vaping products. These measures, however, have done little to stem the availability of illicit goods in stores that have become hotbeds of black-market activity.
Despite rigorous enforcement efforts, public health experts and enforcement agencies argue that current policies are ineffective. John Coyne, head of strategic policing at the Australian Strategic Policy Institute, emphasizes that the initial goals of Australia’s public health policies remain relevant, but warns that without reform, the government’s efforts will be undermined by organized crime syndicates.
“There are serious unintended consequences to our current policy,” Coyne says. “We have to adjust our approach before the problem spirals further.”
The cycle of violence has expanded beyond Victoria, with police confirming similar attacks in New South Wales, Queensland, and South Australia. Victoria Police Senior Sergeant Banks warns that the conflict will continue as long as there are store owners willing to cooperate with crime groups or to sell black-market tobacco products.
Another factor complicating Australia’s battle against illicit tobacco is the siloed nature of its regulatory approach. The federal government has deployed several agencies to enforce tobacco regulations, each with a specific mandate. Health, taxation, border protection, and law enforcement agencies all play a role, yet these organizations operate independently, leading to inefficiencies and overlaps in enforcement.
In response, the Australian Border Force (ABF) recently suggested a more cohesive approach to tackle the illicit trade. ABF Commissioner Michael Outram has advocated for a closer alignment between federal bodies and state authorities to address the issue effectively. However, federal agencies appear reluctant to revise excise taxes on tobacco – despite the illicit market’s estimated value of $2.8 billion.
In Melbourne’s outer suburbs, where Hamad and his associates have exerted influence, the impact of illicit tobacco on vulnerable communities is profound. As legal prices increase, many residents, particularly in working-class communities, turn to cheaper, illicit products. Leila Alloush, CEO of Victorian Arabic Social Services, notes that for many, illegal tobacco products are a necessary vice they can afford.
“People are limited in their choices. They’re addicted, and they cannot afford to pay double for legal cigarettes,” Alloush says.
The government’s hesitancy to alter excise rates, however, may continue to fuel demand for black-market products, as addicts who are priced out of the legal market often have no alternative but to turn to illicit channels.
