Police running out of room to store illegal cigarettes they’ve seized amid Australia’s booming illicit trade

Police are struggling to store a growing wave of illegal cigarettes and vapes seized from criminals, with secure facilities at capacity and the high cost of destroying illicit products becoming prohibitive.

The Australian federal police (AFP) has been spending as much as $13 a kilogram for vapes to be destroyed, with some companies requiring the cartridge, battery and heating element to be manually dismantled.

Destruction of a standard 550kg pallet can cost more than $7,150.

AFP officials told a parliamentary inquiry into the booming illicit tobacco trade that storage facilities in Australia were at capacity and the cost of destruction of illegal stocks was putting major pressures on law enforcement efforts.

“For large-scale seizures, these costs quickly become prohibitive, underscoring the increasing pressure on law enforcement resources and the need for more efficient, innovative storage and destruction solutions,” the AFP told the inquiry.

“There are opportunities to reshape the roles and responsibilities of commonwealth agencies responsible for seizure, storage, movement and destruction of tobacco and other drugs, noting current issues where AFP drug storage facilities are at full capacity and are costing the commonwealth to continue expanding storage facilities.”

The Illicit Tobacco and E-cigarette Commissioner has told the inquiry about 2.66bn illegal cigarettes have been seized in Australia, along with 510 tonnes of loose leaf tobacco products and 7.5m e-cigarette products, since 2016.

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But the illegal industry has been growing rapidly.

Illicit tobacco trade has cost the federal budget $6bn in lost excise in less than six months. The Albanese government’s mid-year budget update in December forecast tobacco excise would raise about $5.5bn in 2025-26.

By the time of last week’s federal budget, that figure had dropped to $4.1bn. Treasury expects it to fall to $2.1bn by mid-2030.

A hearing in Canberra on Monday was told criminal gangs were using money laundering systems to handle billions in profits from illegal cigarettes, including converting dirty cash into cryptocurrency to evade police.