Inside the thriving black market behind those mysterious tobacconists popping up all over the country – and the black market cigarettes that are generating record profits

Black market cigarettes now make up 100 percent of sales in the booming high street tobacco shops opening across the country, a Daily Mail Australia investigation has found.

Now fears are growing that ferocious firebomb wars between organized crime gangs in Victoria, which have targeted the lucrative tobacco trade, will spread north into NSW.

But retailers say they must sell the counterfeit packs to survive as the cost of legal cigarettes proves prohibitive.

And they argue that while the threat from gangsters and standover men is real, they have nothing to fear from authorities who ignore the illegal cigarette trade.

On Friday, NSW Police released CCTV footage of several attacks on tobacco shops, including a ram raid and two arsons.

The black market trade is run by criminal groups who engage in tit-for-tat violence and use the profits to finance other illegal activities.

In Sydney, illegal cigarettes are now seemingly available on every street corner.

Daily Mail Australia randomly visited three domestic tobacconists this week to find out what was really on offer under the counter.

One tobacconist offered packs of Chinese brand Double Happiness for $15 and Manchester for $20.

As fears grow, ferocious firebomb wars between organized crime gangs in Victoria, who have targeted the lucrative tobacco trade, are spreading north into NSW.

The magical phrase ‘What’s your cheapest pack of cigarettes’ made retailers reach for the untaxed brands hidden from view in stores.

They all sold tobacco on the black market, although some were more open about it than others.

One seller said he offered no taxable products at all.

“We do sell Benson and Hedges, but those are the $20 ones,” she added.

In a cardboard container behind the counter he had packs of Double Happiness for $15, and Manchester and other counterfeit brands for $20.

He also sold 50 gram bags of tobacco for $25.

He said he did not bring the cigarettes into the country himself and that they were imported by a third-party “distributor” from countries such as the United Arab Emirates and China.

He said he risked a hefty fine if he sold vapes, but insisted the untaxed cigarettes were “good for the police”.

Although police sometimes confiscated cigarettes from tobacconists, he said he was not aware of any fines ever imposed, and even the seizures were rare.

Another owner sold Manchester for $20 and Double Happiness for $16, with the packages kept in a back room.

“These are from Dubai,” he said of the Manchester brand.

Although his store had a large cupboard full of legal tobacco, he said illegal cigarettes – which do not carry Australian health warnings or plain packaging – accounted for 95 percent of his sales.

But he admitted he was concerned about a new law that will require warning messages on every individual cigarette from March 31 next year.

He said the law could force him to sell large amounts of stock, worth $500,000.

A third owner, when asked for cheap cigarettes, first offered legal cigarettes from his cabinet, but when asked for something even cheaper, he grabbed a $20 pack from a drawer.

None of the sellers will say who distributed the cigarettes, but police say organized crime is behind this treacherous distribution network.

Shocking footage released on Friday shows ram raiders driving a stolen car into the front of a store, destroying several displays and stealing large quantities of cigarettes.

The same tobacconist was rammed again a month later before two men poured fuel into the business and fled without setting it on fire.

The following night, another tobacconist in a nearby town was set on fire in the seventh arson in NSW since March 2023.

NSW Health is the lead agency trying to tackle black market tobacco in Sydney. Daily Mail Australia does not suggest there is any crime in the store pictured

It follows 114 arson attacks in Victoria linked to Middle Eastern organized crime syndicates and outlaw motorcycle gangs.

The Federal Government earlier this year committed almost $200 million to curb illicit tobacco, but it is state and territory governments who will decide how to limit retail restrictions.

Both Victoria and NSW have stepped up efforts this week to clamp down on trafficking, forcing retailers to become licensed and increasing fines for dodgy traders.

Under the proposed laws, sellers in Victoria will also have to take a fit-and-proper person test and could be refused a license based on their history and employees.

Similar provisions were proposed by the NSW Opposition but were not supported by the state’s Labor government in Parliament this week.

Both major parties supported substantial increases in fines for illegal tobacco, which are expected to come into effect in the coming months.

The NSW Health department is the lead agency trying to tackle black market tobacco in the state.

While police assist with any health inspections or seizures, it is NSW Health inspectors who issue the fines.

A tobacco industry source said the black market is flourishing whenever federal Health Minister Mark Butler announces a new crackdown.

Manufacturers had been given just five months to reconfigure their supply chains in response to the latest law.

That may not be enough time to bring the cigarettes with the new warnings onto the market, leaving the entire tobacco market in the hands of organized crime.

“This pressure will only lead to one result: black market crime will increase and excise revenues will be lost,” the source said.

‘It shows a clear disconnect between the Albanian government and the reality of running a business.

“If manufacturers can’t meet the March 31 deadline, Australia will face a period when there won’t be a single legal cigarette on the shelves, leaving consumers with no choice but to turn to the black market.”

It is up to state and territory governments to decide how to impose restrictions on retailers

The black market trade is run by criminal groups who engage in tit-for-tat violence and use the profits to finance other illegal activities

Theo Foukkare, chief executive of the Australian Association of Convenience Stores, agreed the law risks pushing even more Australians into smoking unregulated cigarettes.

“We support the health warnings, but the federal government is making this far more complicated than it needs to be, with a timeframe that is simply not realistic.

“That’s why we want them to adopt the Canadian model, which has implemented this important change in 18 months.”

Daily Mail Australia has contacted NSW Health and federal Health Minister Butler for comment.