Since March of last year, the Australian state of Victoria has been rocked by a series of arsons and firebombings. Some of the targets are victims of extortion; others are caught in an escalating turf war between rival gangs. Two men with links to organized crime have been publicly murdered, one in a broad-daylight shooting at a shopping mall in a Melbourne suburb. Violent conflict is not unexpected in organized crime, but what is unusual is the drug at the center of this conflict: nicotine.
This tobacco turf war has been widely covered in Australian media but generally ignored elsewhere. In international public health discourse, Australia is often upheld as a model for mainstream tobacco control—lauded for its graphic warnings on cigarette packs, extremely high cigarette taxes, and strict prohibitions on e-cigarettes. Recent events, however, demonstrate how these policies can backfire.
"There's just a lot of shock and disbelief," says James Martin, a criminologist at Deakin University in Melbourne. "The issues that we've been dealing with for a long time with more traditional, hardcore illegal drugs have suddenly become issues for a legal drug." Martin describes Australian tobacco policy as increasingly turning into a form of "de facto prohibition."
Australia's Road to Prohibition
Sky-high taxes were the first driver of Australia's illicit tobacco market. Figures from the World Health Organization rank Australian cigarette prices as the highest in the world, the equivalent of $23 for a 20-pack. Tobacco taxes now account for over 65 percent of the retail price of cigarettes in Australian shops.
Predictably, while Australian smoking rates have fallen over much of the same period that tobacco taxes have risen, the share of tobacco sold illegally to evade those taxes has spiked. "In 2020–21, we seized the highest amount of illicit tobacco ever recorded," the Australian Taxation Office reported last October. "Despite these efforts and in contrast to a shrinking market, illicit tobacco is increasing and has doubled to over 10% of the market."
An Illicit Tobacco Taskforce formed in 2018 has seen border seizures rise by over 300 percent, indicating a massive increase in supply. Industry figures suggest that illicit sources may now comprise nearly a quarter of Australian sales (though it's worth noting that tobacco companies have a lobbying interest in promoting high estimates).
The second driver of nicotine black markets is Australia's extremely restrictive policies on vaping. Since 2008, it has been illegal to purchase e-cigarettes without a medical prescription as an aid for quitting smoking. "The problem is, there are very few doctors that will write scripts for nicotine," says Colin Mendelsohn, founding chairman of the Australian Tobacco Harm Reduction Association. "Then you've got to find a pharmacy that will sell it to you….Very few pharmacies stock them. And those that do have a very small range."
Like most drug prohibitions, these measures haven't stopped people from buying the products they want. There are 1.8 million vapers in Australia and about nine out of 10 of them source their vapes illegally. Some purchase e-cigarette components and import nicotine liquid from abroad, but there is also a thriving black market for disposable vapes manufactured cheaply in China. As Rohan Pike, former leader of the Australian Border Force's Tobacco Strike Team, told The Sydney Morning Herald last year, "The margins are huge, the enforcement is low, so it's a low-risk, high-profit business."
Australia's policy response to these massive illicit markets is to crack down even harder. The government tightened restrictions this year, banning imports for personal use, imports of disposable vapes with or without nicotine, and imports of vapes in flavors other than tobacco, mint, or menthol.
A new bill expected to pass the Australian Senate would take even more drastic measures, threatening imprisonment for importing, manufacturing, supplying, or even possessing commercial quantities of vaping goods without authorization. Health Minister Mark Butler explained that penalties will include up to seven years imprisonment and fines up to $2.2 million. "We are serious about stamping this public health menace of recreational vaping out," said Butler. The bill includes an exemption for personal use, but as it is currently written possession of even noncommercial quantities of vaping products could be punished with up to one year in prison.
A New Drug War
Not only would these draconian penalties make Australia an even greater outlier among Western countries with regard to vaping, but it is also unlikely the law will work as intended. The prescription-only model is "a total disaster," according to Martin, and is creating the country's second-largest illegal drug market after cannabis. "And the rest of the drug war is not going well. Other illegal drugs are cheaper, more readily available, more potent, more widely used than they were 20 years ago, and that's despite record numbers of seizures and arrests," Martin says.
Mendelsohn agrees that Australia's prohibitionist approach is failing: "We have higher vaping rates than most other Western countries. It certainly hasn't reduced the rate because the kids can access these vapes so easily. Once you've created the black market, they'll sell to anyone."
There are also indications that youth smoking—a far more dangerous activity than vaping—is on the rise in Australia. The country has managed to combine some of the world's most restrictive tobacco policies with rising rates of both smoking and vaping among young people.
Australia's astronomical tobacco taxes and extreme restrictions on vaping have predictably combined to fuel its illicit markets. "On the one hand, we're making [smoking] unaffordable," says Mendelson. "But we're not going to let you quit by the most popular and most effective quitting aid." He notes a marked contrast with New Zealand, which has similarly high cigarette taxes but embraces a much more liberal approach to vaping. Not coincidentally, New Zealand now boasts one of the world's lowest rates of smoking.
Meanwhile in Australia, Butler's policies are overtly hostile to lower-risk sources of nicotine that are cutting the use of cigarettes in other nations. If the proposed vaping bill passes, cigarettes will remain freely sold throughout Australia while sellers of much safer e-cigarettes face lengthy terms in prison.
With underground markets turning violent and the government threatening to throw sellers behind bars, it's not an exaggeration to say that Australia's anti-nicotine campaign has spurred a new drug war. In 2022, Ethan Nadelmann, founder and former executive director of the Drug Policy Alliance, described increasingly prohibitionist restrictions on tobacco and vaping as criminogenic—that is, they force buyers and suppliers into illicit markets and create crime where previously lawful and peaceful markets existed. Australia now offers a case study in this dynamic, with competing gangs fighting for territory in the illicit nicotine market, extorting retailers, firebombing stores, and possibly ordering hits on their rivals.
"Melbourne is a peaceful place. Organized crime exists everywhere, but serious levels of violence like this are very unusual," says Martin. "And God only knows what would happen if they did try to implement this in London or in the United States." It's a lesson that should be taken seriously, especially as lawmakers and anti-smoking groups promote flavor bans, low nicotine standards, and tobacco-free generation laws at the expense of harm-reduction approaches that have proven to reduce cigarette use.
"Australia likes to pride itself as being a world leader in plain packaging or other forms of tobacco control," Martin concludes. "I kind of hope that the world looks at us and takes a different kind of message and sees us as a bit more of a cautionary tale."
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