The Melbourne tobacco wars (and the hordes of people looking for cheap darts) has resulted in the Victorian government's new Tobacco Licensing Scheme.
The new licensing system aims to break the business model of criminal networks while supporting Victoria Police operations against the illegal tobacco trade, which has seen cigarettes tumble from as much as $100 per pouch to as little as $10 across Melbourne, with no regulations in place for the safety of the tobacco itself.
It will launch next month with massive penalties as the Victorian government targets organised crime syndicates profiting from illicit tobacco sales. Applications for the Tobacco Licensing Scheme open from 1 July 2025, giving retailers time to secure licences before enforcement begins in February 2026. The scheme receives backing of more than $46 million from the Victorian Budget 2025-26, funding 14 licensing inspectors from the new regulator Tobacco Licensing Victoria.
Victoria’s new illegal cigarette laws
- Applications open: 1 July 2025
- Enforcement begins: February 2026
- Initial licence fee: $1,176 (17 months validity)
- Annual renewal fee: $830
- Maximum penalty: $355,000 fine or 15 years jail for individuals
- Business penalties: More than $1.7 million in fines
Stay up to date with what’s happening in and around Melbourne here.
The licensing system features the toughest penalties in Australia for those breaking tobacco laws. Any person found selling illicit tobacco faces fines up to $355,000 or imprisonment up to 15 years, while businesses face penalties exceeding $1.7 million. Only fit and proper people passing strict testing will receive licences, with the regulator able to refuse applications based on criminal history or known associates.
Tobacco Licensing Victoria inspectors will support police intelligence gathering efforts against serious organised crime. The scheme builds on Victoria Police’s Taskforce Lunar, which has arrested more than 130 offenders and seized over $37 million worth of cash, vapes and illegal tobacco products.
More raids, seizures expected at Melbourne retailers
The regulator holds powers to cancel licences and disqualify individuals from future applications. Victoria Police will assess licensee suitability and impose additional conditions, supported by more than $4.7 million in budget funding. Enhanced search powers will enable police to conduct faster raids and seizures at retailers suspected of organised crime links.
Licensing fees remain lower than New South Wales and Tasmania. Initial licences run for 17 months from February 2026 enforcement date to prevent businesses applying twice yearly. The scheme protects legitimate retailers from being undercut by criminal syndicates while preventing those with criminal affiliations from entering the legal tobacco trade.
For more information, head here.
