Every day, Mat Evans turns people away from his licensed tobacco store because he doesn't have "the cheap stuff".
When customers ask why he does not sell illicit cigarettes he replies, "because it's illegal and I'll get shut down if I have it".
But in 2026, Mr Evans and his Narooma shop are in the minority.
More than half of the tobacco consumed in Australia last year was bought illegally.
Counting vapes, pouches and other nicotine products, the black market share jumps to 80 per cent.
A decade ago, illegal cigarettes made up about 10 per cent of sales in Australia.
Mat Evans has seen a dramatic decline in revenue. (ABC News: Matt Roberts)
For Mr Evans, who is also a tobacco wholesaler for the South Coast region of New South Wales, the seemingly unfettered availability of far cheaper illegal alternatives has meant fewer customers and a dramatic decline in revenue.
Nationally, the booming illicit trade has fuelled organised crime, is linked to increased nicotine consumption and has created a multi-billion-dollar hole in the federal budget.
Mr Evans believed the solution was "simple" — lower the tobacco excise.
"If we can sell the packets for under $20, most people are going to buy it from us," he said.
A legal packet of 20 cigarettes costs between $40 and $50 in Australia.
Police are trying to keep up with an increasing number of retailers operating on the tobacco black market. (ABC News: Guido Salazar)
For more than 15 years, successive governments have deliberately made cigarettes significantly more expensive to stop people smoking — and it has worked.
In 2010, about one in seven Australians smoked daily.
