“If it’s so easy for a journalist and members of the public to go into these stores and purchase these things, why is it so difficult for prosecution and police to shut them down,” said Professor Becky Freeman, of the School of Public Health at the University of Sydney.

“And when you consider that less than 10 per cent of the Australian population smokes, it just doesn’t add up.”

Inner West mayor Darcy Byrne has been wrestling with the proliferation of tobacco shops in recent years as more than 824 specialty tobacco stores have opened up across his council area, often around schools.

“These shops have low overheads, they require a small space, but they’re not prioritising improving the amenity of the neighbourhood or making a long-term commitment to the main street,” Byrne said.

And yet for every new shop up for lease in the Newtown-Enmore area, at least one-third, if not half, of all inquiries are from tobacconists, said commercial agent David Cradock, of Wisebery Real Estate.

Almost 40 per cent of tobacco consumption across Australia was illicit last year, according to FTI Consulting’s latest industry-commissioned report Illicit Tobacco in Australia, due out mid-year. That’s an increase of 28.6 per cent from the year earlier.

The Tax Office defines illicit tobacco as any related product, imported or homegrown, that has not paid its required customs duty, which makes that 40 per cent of black-market sales a significant hit to federal government coffers – $6.7 billion in lost excise duties last year alone.

Tobacco’s status as the federal government’s fourth-largest source of revenue is projected to fall this year to be the seventh-largest revenue raiser.

To combat it, federal and state governments have rolled out a raft of measures, new fines and extra funding, including last year’s establishment of the Illicit Tobacco and E-Cigarette Commissioner role to co-ordinate efforts, and a nationwide ban on the sale of vapes outside of a pharmacy.

None of this has appeared to work, raising questions about how effectively the laws are enforced, the impact it’s having on high streets and risks posed by organised crime as it moves to corner the black market.

Policing the trade

The job of enforcing our tobacco regulatory regime falls to NSW Health. To that end, last year health inspectors seized an estimated 13.2 million cigarettes and 3300 kilograms of other tobacco products worth an estimated $14.7 million – triple the value of related black-market seizures in 2023.

When vapes, e-liquids and nicotine pouches are included, that total street value of seized products rises to about $24 million, thanks to almost 2000 retail inspections and largely concentrated in illicit tobacco hotspots in metropolitan areas.

If authorities are hoping to make up for the shortfall in excise duties, imposing fines is one way to do it. Last November a new regime of fines was introduced, increasing the penalty for anyone caught selling blackmarket tobacco products from $11,000 to $154,000, and up to $22,000 for selling to children. Higher penalties apply to corporate entities.

Further, the number of authorised inspectors across the state is set to increase from 14 to 28, and a new licensing scheme is to be rolled out from July 1 that ties the licence to compliance.

Shortly before this month’s federal election, Health Minister Mark Butler weighed in, offering a further $156.7 million to tackle the tobacco black market to add to the $188.5 million promised early last year on a border force crackdown.

The ABF is on the front line of the industrial-scale importation trade, averaging 141 detections a day of blackmarket tobacco products attempting to enter the country and seizing an estimated 1.86 billion cigarettes last year.

It’s not enough, according to Professor Freeman. It’s a stance she shares with tobacco and convenience store industry representatives.

“The health department have increased their fines a lot, but compared with South Australia, it’s still too little,” said Theo Foukkare, chief executive of the Australian Association of Convenience Stores.

In November, the South Australian government introduced fines of up to $750,000 for a first offence of selling illicit tobacco and up to $1.1 million thereafter. It moved the enforcement and licensing responsibilities from the health department to Consumer and Business Services – the same department that oversees liquor and gaming.

Industry and health experts differ on a rollback on government excise on cigarettes.

Excise duties on cigarettes have increased almost threefold in the past decade, from 47¢ per stick in 2015 to $1.40 in March.

“It’s pretty clear that when the excise was originally introduced, largely between 2010 and 2019, it had a material impact on adult smoking rates,” said Foukkare. “But from 2019 to 2025, we’ve actually seen the legal market out-tax itself, and it’s having the reverse effect on consumers who are exiting the legal market and entering the illegal market.”

It’s an issue likely to be raised in the coming year after Premier Chris Minns agreed last week to the opposition’s terms for a parliamentary inquiry into the exploding illegal tobacco trade.

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Shooters Fishers and Farmers MP Robert Borsak, who is set to chair the inquiry, said the automatic increase in excise duties year on year must indicate it’s not working.

Liberal MP Kellie Sloane, who has been pushing for the inquiry, said despite vapes being made illegal on the general market last year, they would also undoubtedly be raised given they are being sold with illegal tobacco.

“We also wanted to look at where responsibility for compliance falls because communities can’t possibly be protected by 14 compliance officers across NSW,” said Sloane.

“Even when that’s doubled, that’s still no match for what they’re up against, which is large-scale criminal enterprise.”

Tobacco’s winners

To know who the biggest winners are behind the proliferation of tobacconists, look to tobacco tycoons such as Ahmad Sabbagh, Muh’d Al Zoubi and Ghaith Jaradat, who together have a part or shared interest in about 30 TSG Station tobacconists across Sydney.

The dozens of franchises are all held in company names, often shared by one or two of them, making them among TSG’s best customers, which is itself the largest tobacco franchise in the country.

As far as TSG head office is concerned, shops run by Sabbagh, Jaradat and Al Zoubi are great operations: the stores are clean, fully stocked and set in prime locations such as Balmain, Potts Point, Bondi Beach and a dozen outlets across the CBD and inner city.

Such success has not only made them recognisable names in the tobacco franchise business, but has been parlayed into impressive home real estate.

Jaradat, 41, bought his first home less than two years ago, setting a then suburb record of $5.1 million for a derelict cottage in Malabar that is expected to be rebuilt into a more significant residence set on one of the suburb’s best streets, opposite Randwick Golf Course and with views across Malabar Bay.

Al Zoubi, 49, has also staked his name to a suburb record of his own. In 2022, he bought one of Bexley’s best houses for a then suburb high of $4 million, buying a five-bedroom residence with marble finishes throughout, a swimming pool, spa and guest retreat. His initials feature on the property’s ornate steel gate.

The home of Sabbagh, 56, is no slouch either. The grand three-level mansion with basement garaging, pool and parkside views in Merrylands was built a few years ago on the site of what was a red brick house he bought in 2018.

But such success has brought with it the attention of health authorities.

All three men either declined to comment or didn’t return calls and texts for this story, and their lawyer said he was unable to pass on queries, but court records show they have upcoming local court appearances to answer allegations of the sale of illicit tobacco products in their stores.

Al Zoubi faces court this month to answer to six offences related to sale and display of a restricted substance in one of his TSG stores, and TSG Matraville co-owners Sabbagh and Jaradat are due to front local court to face allegations related to the sale of almost 200 packets of cigarettes that don’t carry a health warning.

If found guilty, Sabbagh knows the penalties have increased in recent years. In 2022, he pleaded guilty to two charges of selling nicotine vapes and was sentenced to a two-year conditional release order and ordered to pay the health department’s $7000 legal costs and a $180 for the analysis of the vape. It came on the back of four warnings from NSW Health inspectors.

Penalties for importation are far greater. A few months before Jaradat bought his Malabar home, he was slapped with one of the Therapeutic Goods Administration’s largest fines for the illegal importation of nicotine vapes on four of Jaradat’s corporate entities, totalling $588,840 after border force intercepted the importation of 379,600 vapes.

The cases did not raise any involvement by Sabbagh, Jaradat and Al Zoubi in organised crime, and this masthead does not suggest there is any such connection.

Crime concerns

The so-called tobacco wars have been making headlines in Melbourne for the past two years, and while Sydney has been left comparatively unscathed, two firebombings this month in Auburn and Mount Pritchard have authorities on high alert.

Wherever that commodity goes, violence follows, says Jason Box, commander of NSW Police’s criminal groups squad, targets of which have become increasingly involved in illicit tobacco in the past year.

Chief among them is the Alameddine crime gang, allegedly stealing millions of dollars worth of illicit tobacco from rival organised crime networks importing the product into the country.

Strike Force Sheringham was launched last September to investigate the Alameddine network’s involvement in the illicit tobacco market through a spate of violent robberies, starting in March last year, when the group allegedly stole $1.5 million worth of tobacco and $10,000 worth of cigarette papers from a Casula storage unit.

Six months later, eight Alameddine members and associates were arrested over several successful and attempted robberies. Associates of KVT, a predominantly Fijian street gang linked to the Alameddines, were also arrested.

In subsequent raids, detectives seized more than 1.4 tonnes of illegal tobacco, 600 illegal vapes worth around $600,000, and large amounts of cash from homes linked to the Alameddines.

In January, the violence reached new heights when at least half a dozen Alameddine associates allegedly broke into a Condell Park storage unit and held three men hostage during an attempted tobacco robbery.

When police found the men inside, they had been beaten and had their arms and legs bound, and one of them had a toe partially severed. It is not known who the tobacco was being stolen from or who had imported it.

Lawyers for the three men charged over the incident – Ahamad Dudu, Mohamad Kaddour and Iafeta Fepuleai – say police have put forward no evidence establishing their clients’ links to the Alameddine clan. Police are yet to identify the rival organised crime networks being targeted by the Alameddines, but believe the crime family is just one of the key players in the illicit tobacco market.

For now, Box said they have stemmed the violence linked to illicit tobacco. But while NSW Police is at the forefront of the fight against organised crime, it has actively distanced itself from policing illicit tobacco.

“Our involvement is primarily about the acts of violence that was used by these people to take the tobacco,” Box says.

“I think our system and our response is adequate, and we’ll keep maintaining that.”

Lighting up High St

Darcy Byrne has come up with his own proposal to counter the spread of tobacconists in the Inner West. Last year he wrote to Planning Minister Paul Scully to urge him to look at amending the planning regulations to require tobacconists to lodge a development application.

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“As it is now, it’s just a change-of-use application, so any main street business can be flipped into a tobacco store and we don’t really have a right of refusal,” Byrne said.

“If a DA was required and had to articulate a social impact assessment on the local community, then there would be grounds for refusal if there are already other tobacconists nearby, and particularly if they are near a primary school.”

Anything that addresses the issue would be welcomed by James Cottam, commercial property manager at Richardson & Wrench Newtown, who says the influx of tobacconists locally is distorting the commercial real estate market.

As more tobacconists come in, they’re offering above market rents, which is artificially inflating the market and making it harder for other businesses to compete, said Cottam.

“I’m obligated to pass that higher offer on to the owner, but I urge them not to accept it.”

And after recently reported firebombing of tobacconists in Sydney, the Insurance Council of Australia has confirmed that some insurers are taking this into account when pricing insurance.

“Shabby shop fit-outs are part of it,” says Cradock, adding that the numbers don’t stack up. “There’s some sort of monkey business at play there.”

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