Cairns illegal tobacco: Black market trade thriving in Cairns
Watch the police footage after they seized an alleged haul of black market tobacco in Far North Queensland.
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Organised crime networks pedalling illegal tobacco have set up in plain sight, selling black market chop chop and smuggled cigarettes in a nefarious trade that diverts significant cash from legitimate retailers and costs the Australian government $1.8bn a year in lost excise.
On Wednesday A 29-year-old New Zealand woman was charged after the execution of two search warrants in Innisfail uncovered more than 150kg of illicit tobacco and cigarettes on Wednesday, January 18.
The search warrants were executed after multiple reports from the community.
Police allegedly uncovered more than 87kg of cigarettes in fake packaging (65,600 individual cigarettes), illegally imported vape products and a quantity of cash in an Owen Street motel room.
Police will also allege around 70kg of loose tobacco and cigarettes in fake cartons and non-compliant packaging were located at a shop on Ernest Street.
The woman has been charged with one count each of possession of tobacco (100 kgs or above), offence to buy or possess S4 or S8 medicines or hazardous poisons, selling or supplying tobacco products in non-compliant retail packaging and possess tainted property.
She is due to appear before Innisfail Magistrates Court on February 27.
A Cairns Post investigation has also uncovered evidence of a city retailer selling unbranded rolling tobacco known as chop chop at heavily discounted rates alongside branded international cigarettes without mandated health warning labels.
While 50g of a popular brand of rolling tobacco such as Champion Ruby sells for about $110, an illicit city trader offers 50g of chop chop for $50.
Twenty stick packets of Marlboro and Manchester sell for $20.
Legitimate tobacco retailers fear a raft of new tobacco control measures to include the banning of menthol, pop filters and flavoured cigarettes will drive sales underground, further hurt the legal trade and line the pockets of criminals.
Speaking on the condition of anonymity a legal tobacco retailer that owns a network of north Queensland stores said organised crime networks were exploiting a federal law that Queensland Police had little power to uphold.
“There has been little or no action taken against stores that are blatantly breaking the law because Queensland Police have a concerning lack of powers to intervene and disrupt this sort of criminal activity,” the retailer said.
The shop owner claims illegal tobacco was being grown on the Atherton Tablelands for Middle Eastern crime syndicates and sold as chop chop through illegal retail outlets in Ayr, Townsville, Mackay and three shops in Cairns.
“What is happening is Middle East networks are selling chop chop and not paying excise and not paying tax, they are doing it upfront here in Cairns,” she said.
“Our cheapest packet of cigarettes is $28.50 and they’re selling the same for $20.
“Border Force cannot control it, even though it’s illegal to sell it, it falls under the tobacco law and they can’t do anything about it.
“I am disgusted.”
ILLICIT ENFORCEMENT
When contacted by the Cairns Post, Queensland Police Service, Australian Federal Police and Australian Border Force declined to respond to questions with a suggestion the Australian Taxation Office be contacted.
The ATO stated tax not paid on locally grown tobacco and tobacco imported illegally in 2020-21 was estimated to be about $1.89bn.
“Tobacco growing operations are not run by small producers of farmers, they are run by organised crime syndicates who deliberately engage in illegal activities,” a spokesman said.
“The ATO is primarily focused on targeting the source of illicit tobacco supply. Removing illicit tobacco from crop to shop creates a level playing field and also helps to stop organised crime syndicates from funding other activities.”
Earlier this month the ATO, Queensland Department of Health and police officers raided Sunshine Coast businesses suspected of supplying illicit tobacco and arrested two men.
But authorities have struggled to bring illicit tobacco convictions.
Between 2016 and 2022 the Illicit Tobacco Taskforce (ITTF) has only won 14 convictions against black market traders despite a mind boggling 47,000 per cent increase in cigarette stick seizures between 2020–21 and 2021–22.
SKYROCKETING COST
Cigarettes prices remained largely unchanged for 50 years between the 1940s and 1990s before increased federal excise and customs duty steadily brought price hikes beginning in the early 1990s.
In 1989 a packet of Winfield 25s cost $2.66.
It’s now worth $48.70, representing a 1500 per cent price increase within a 33 year period.
However it was not until 2020 that the illicit trade began to gain a foothold in Australia and in 2022 according to a KPMG report illicit tobacco now accounts for 19.3 per cent of all tobacco consumed in Australia.
If the 2242 tonnes of illicit tobacco had been consumed legally, it would have generated an additional $3.4bn in tax revenue.
With increased cost of living pressure, cheaper illicit products have become more tempting for smokers while criminal enterprises exploit ever increasing tobacco excise leading to more costly smoking products.
LOCAL IMPACT
In Cairns recently to lobby for the stamping out of the illicit trade, the tobacco industry representative said there had been positive steps made in Queensland in May this year when the government announced a review smoking laws through a regulatory impact statement proposing granting of more police power to search and seize, a state-based licensing scheme and the creation of specific tobacco sale penalties.
“The review is moving incredibly slowly and we need this issue fixed,” she said.
Amid a backdrop of honest tobacco sellers facing financial ruin, the source said she will be forced to make some tough decisions on the future of her north Queensland business.
“We take in $1.6m a week across 10 shops. We are now down $200k and this is our best-selling time of year and if this downturn continues we are going to have to start laying off staff,” she said.
“I am not doing this for just us, this is for all these retailers that are struggling and don’t know how to keep afloat.”
If you suspect that illicit tobacco is being grown or manufactured in your community, you can confidentially report it to the ATO by completing the tip-off form or phoning 1800 060 062.
Originally published as Cairns illegal tobacco: Black market trade thriving in Cairns
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