The Victorian Labor government introduced long-awaited legislation to state parliament on Tuesday to establish a tobacco licensing scheme and increase sanctions.
"There will be massive consequences, massive penalties for people who breach this regime," Premier Jacinta Allan told reporters.
"These penalties are the toughest penalties in the nation."
Individuals caught selling illegal tobacco and vapes will face fines of more than $355,000 or up to 15 years in jail, while businesses could be hit with a fine of more than $1.7 million.
There have been 114 arsons linked to Middle Eastern organised crime syndicates and outlaw motorcycle gangs fighting for control of the lucrative tobacco and vape black market.
Victoria Police's illicit tobacco task force has carried out at least 200 raids, made 94 arrests and seized more than $37 million worth of illicit tobacco, vapes and cash since October 2023.
The tobacco shop arsons are linked to a turf war between crime gangs. (James Ross/AAP PHOTOS)
Under the bill, only licensed retailers will be able to sell tobacco products.
No details were provided on how much the scheme will cost to implement or the fee for licencees.
Inspectors from a new tobacco regulator will issue fines instead of police, in a scheme similar to liquor licensing.
Police will have greater powers to make it easier and quicker to raid, search and seize illicit products from retailers with links to organised crime, and further licence conditions can be imposed.
Vendors will also have to pass a fit-and-proper-persons test and can be refused a licence based on their history and associates.
"Our goal is to make sure that we run organised crime out of this state," Police Minister Anthony Carbines said.
Police blame bikies and Middle Eastern crime gangs for the arson attacks. (Joel Carrett/AAP PHOTOS)
Victoria Police Chief Commissioner Shane Patton said officers would be able to provide intelligence to the regulator when making its rulings.
The significant penalties would deter black market operators but won't end the turf war overnight, Mr Patton said.
"Whilst it by itself won't stop what we have in terms of the conflict at the moment ... this will add to our ability to really make a difference," he told ABC Radio.
Victoria became the last Australian state or territory without a tobacco licensing scheme in September, when Queensland's began, hampering the southern state's efforts to crack down on dodgy tobacconists and stores.
A Better Regulation Victoria review recommended the licensing scheme in 2022.
High taxes are being blamed for the surge in black market tobacco products. (Dean Lewins/AAP PHOTOS)
In May 2023, federal Health Minister Mark Butler announced the tax on tobacco would increase five per cent each year for three years from September 1, 2023.
The last increase in September 2024 saw the price per cigarette increase to $1.36 from $1.27.
Ms Allan conceded taxation of tobacco products was partly responsible for pushing more smokers onto the black market.
"There is some anecdotal reporting of that," she said on Tuesday.
Opposition Leader John Pesutto said the government had taken too long to draft the bill, but the coalition would not stand in the way of rushing it through parliament.
Opposition consumer affairs spokesman Tim McCurdy said the devil would be in the detail but time was of the essence.Â
"Every time we wait and we wait for weeks and months, more tobacco shops will burn," he said.
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