10 November 2025
5 min read
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Two Sydney stores have become the first to be shut down under New South Wales’ new tobacco retailing laws, following allegations of illicit tobacco sales. The closures mark a significant milestone in the state’s crackdown on black market cigarettes and vapes, and signal the beginning of active enforcement under new laws that commenced on 3 November 2025.
Landlords who lease premises to tobacco retailers are reminded of their new powers under the Tobacco Legislation (Closure Orders) Amendment Act 2025 No 51 (Amendment Act) to terminate leases where tenants fail to hold a valid tobacco licence for the store they operate.
The NSW tobacco licensing scheme replaced the old retailer notification scheme on 1 July 2025 and requires retailers selling tobacco or non-tobacco smoking products to hold or apply for a valid tobacco licence for every physical and online store they operate by 1 October 2025.
The new licensing scheme corresponds with new laws for vapes introduced in July 2024 which means that from 1 July 2024 all vapes and vaping products, regardless of nicotine content, can only be sold in a pharmacy for the sole purpose of medical or therapeutic use.
Retailers who applied by 1 October 2025 can continue trading while their applications are being processed or approved. Those who failed to apply, or whose applications were refused, cannot sell such products until a licence is granted. If found in breach, individuals face fines of up to $660,000, while companies could be fined up to $880,000. The revenue collected will contribute towards the cost of the scheme and will be used to bolster enforcement.
Under the Amendment Act, landlords can terminate a lease if the tenant has not applied for, or been granted, a tobacco licence to operate.
The Amendment Act specifically allows landlords to terminate leases affected by closure orders (issued for example due to illegal tobacco sales or operating without a valid licence) without tenants being able to access mediation, dispute resolution, or compensation rights under the Retail Leases Act 1994, Small Business Commissioner Act 2013, or Real Property Act 1900.
If a closure order is issued against a premises, the lease is automatically deemed to include a clause allowing the landlord to terminate the lease.
The landlord can terminate the lease by giving at least 28 days written notice and tenants are unable to initiate proceedings against the landlord for terminating the lease under this provision. In other words, the dispute mechanisms available to tenants under the Retail Leases Act 1994 do not apply in these particular circumstances.
The tenant is treated as if the tenant has repudiated the lease, meaning the tenant is deemed to have breached an essential term of the lease.
The NSW Government is currently looking at bringing in additional legislation for further offences, only this time against landlords who knowingly lease or continue to lease premises to sellers of illegal tobacco. That being the case, future laws will most likely seek to impose financial penalties upon landlords who choose to simply look the other way.
Apart from New South Wales, Victoria and Queensland have also taken steps to tighten tobacco regulation.
Victoria’s tobacco business licensing scheme commenced on 1 July 2025, aligning with New South Wales in timing but differing in scope. Under the Victorian scheme, all retailers and wholesalers of tobacco products, including cigarettes, cigars, and any other products containing tobacco, are required to apply for a tobacco licence. This includes retailers such as supermarkets, grocery stores, convenience stores, liquor licensed premises, tobacconists and petrol stations. However, the scheme excludes e-cigarettes and vapes, which remain regulated under separate federal laws.
Applications must be made from 1 July 2025, with Tobacco Licensing Victoria commencing enforcement action from 1 February 2026. From that date, retailers selling tobacco products without a valid licence could face penalties including fines and imprisonment for individuals.
The amending legislation in Victoria does not empower a landlord to terminate a lease because a tenant has not complied with the law. However, landlords leasing premises to tobacco retailers should still be aware of the scheme and consider whether their lease agreements adequately address compliance obligations.
Queensland recently introduced a raft of reforms to existing tobacco laws through the Tobacco and Other Smoking Products (Dismantling Illegal Trade) and Other Legislation Amendment Bill. If passed, the Bill will introduce new obligations for landlords leasing premises to tobacco or vaping retailers. These include potential civil liability for knowingly or recklessly allowing illegal tobacco activity on their premises, and a statutory right to terminate a lease when a premise is subject to a closure order.
The Bill also proposes to expand powers to shut down non-compliant businesses for up to 12 months, seize both illicit and lawful tobacco products found together, and allow authorised persons to enter wholesale premises without a warrant or the occupier’s consent.
Like New South Wales, Queensland’s reforms would create a direct legal pathway for landlords to act against tenants involved in illicit tobacco activity. Landlords should monitor the Bill’s progress and consider reviewing lease terms to ensure they can respond appropriately if the legislation is enacted.
Landlords who currently lease, or are planning to lease, premises to tobacco retailers should take the following steps:
If you have any questions about the various legislation, or need assistance with a tenant’s agreement or dispute, please contact us here.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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