On the back of their new licensing scheme that started on 1 July, the New South Wales Government is now introducing tough new laws - and much bigger penalties - for sellers of illicit tobacco and illegal vapes across the state.

With the new reforms being introduced the maximum penalty will be a $1.54 million fine or 7 years' gaol, or both.

For premises found to be selling illicit products, closure orders of short-term (up to 90 days) and long-term (up to 12 months) and lease termination powers for landlords will come into force.

NSW Minister for Health, Ryan Park, says it will stem the proliferation of illicit tobacco.

“We understand the community’s frustration at the growth of the illicit tobacco market," said Mr Park.

“These will be among the toughest penalties in the country and will send a clear message to bad actors that selling illegal tobacco and vaping goods will not be tolerated in NSW."

Minister for Health Ryan Park says tougher penalties will "send a clear message" to people selling illegal tobacco. [IMAGE: NSW Government]

But not everyone is convinced the tougher penalties will be enough to quash the prolific illegal tobacco industry.

One Western Plains business owner, who wants to remain anonymous due to fear, says the new licensing scheme will cost legal businesses more money, but won't do much to stop illegal tobacco shops.

"This is only going to cost the people who are doing the legal things," they said.

"We're now going to have to pay $1100 per year for a licence, plus a police clearance certificate.

"These are small businesses, who don't have the money to be paying $1100, on top of reduced margins."

The business owner said the cheapest they can sell a packet of legal cigarettes is for $35, and they only receive $2 of profit on the sale.

In comparison, illegal tobacco vendors are able to sell the same packet of cigarettes for only $9.

The anonymous owner said NSW Police should be regulating the sale of illegal tobacco instead of NSW Health.

"Liquor licenses are managed by the police department, while tobacco licenses are managed by health department.

"So police cannot raid illicit tobacco without the health department," they explained.

"There's no fear at all, they open up the next day.

"The police need the power to raid illegal shops without NSW Health."

From 1 January 2025 to 30 June 2025, NSW Health conducted over 700 retailer inspections and seized more than 90,000 nicotine vapes, e-liquids and pouches, and more than 6 million cigarettes and 1,100 kg of other illicit tobacco.

They also issued around 150 penalty notices, totalling an estimated $316,000.

A parliamentary inquiry into the illegal tobacco trade chaired by the Honourable Robert Borsak MLC was accepting public submissions between 22 May and 1 August.

It is expected to hand down its findings in the coming months.