Police in Australia are running out of room to store the cigarettes and vapes they seize from criminals, as the cost of destroying the growing haul adds fresh pressure to already stretched law enforcement budgets.
Federal police told a parliamentary inquiry on Monday that secure facilities for seized illegal cigarettes and vapes are at capacity, and that destruction costs are becoming prohibitive. In some cases, the Australian Federal Police has been paying as much as $13 a kilogram to have vapes destroyed, while a standard 550kg pallet can cost more than $7,150. Some contractors require vape cartridges, batteries and heating elements to be manually dismantled before they can be destroyed.
The scale of the problem is now clear. The Illicit Tobacco and E-cigarette Commissioner said about 2.66bn illegal cigarettes, 510 tonnes of loose leaf tobacco products and 7.5m e-cigarette products have been seized in Australia since 2016. AFP officials said the cost of holding and destroying those stocks was putting major pressure on police efforts, with one statement to the inquiry saying there were opportunities to reshape the roles of commonwealth agencies handling seizure, storage, movement and destruction because current drug storage facilities were full and costly to expand.
The storage crunch lands at a moment when the illicit tobacco trade is also blowing a hole in public finances. The trade has cost the federal budget $6bn in lost excise in less than six months. In December, the Albanese government’s mid-year budget update forecast tobacco excise would raise about $5.5bn in 2025-26, but by last week’s federal budget that figure had fallen to $4.1bn. Treasury now expects tobacco excise to drop further, to $2.1bn by mid-2030.
On Monday in Canberra, a separate hearing was told criminal gangs were using money-laundering systems to move billions in profits from illegal cigarettes and were converting dirty cash into cryptocurrency to stay ahead of police. Anthony Helmond said the banking sector was also reporting remittance providers and privately owned ATMs being used to move funds to pay for illegal tobacco stock. He said those machines were not linked to banks, could be leased by individuals or businesses, and were often used to put the proceeds back into circulation.
The money trail matters because the trade is no longer just about cheap cigarettes. Profits from illegal tobacco have been linked to drug trafficking, firearms offences, assaults, corruption and worker exploitation. More than 200 firebombings and three deaths have been tied to the trade since 2023, giving the industry a violent edge that has spread well beyond the border and the warehouse.
The immediate problem for investigators is not proving the trade exists. It is finding places to put the evidence, and paying to destroy it once they do. With storage facilities already full and destruction costs rising, police are being forced to absorb the burden of an illicit market that keeps growing faster than the system built to contain it.
