Casey Costello to bring paper to Cabinet to crack down on NZ illicit tobacco market
Friday, 19 June 2026
Associate Health Minister Casey Costello is bringing a paper to Cabinet in the coming weeks to crack down on the illicit untaxed tobacco market that is growing in New Zealand.
Costello’s office refused to reveal details, but said it would centre on taking action against the illicit cigarette and tobacco market, with a system that is aimed at reducing harm, is coherent across products and is enforceable.
“The minister has said for some time that we need a better, more coherent regulatory regime around tobacco and other products,” her office said.
Costello announced last month that Customs, police, Health NZ and the Ministry of Health had joined forces to better target and dismantle the illegal tobacco trade.
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A recent survey estimates that a third of tobacco consumed in New Zealand is now illicit, resulting in $817 million in lost tax in 2025.
The Sunday Star-Times reported on a “roaring trade” of untaxed tobacco operating openly in New Zealand. Despite that, in the year ending March the Ministry of Health did not undertake any enforcement action against retailers under Smokefree legislation.
Costello said in her announcement last month that the regulatory and enforcement regime around tobacco is currently “complex”.
The Ministry of Health sets tobacco control policy and enforces smokefree legislation, while Health NZ operates the investigation teams that check retail compliance.
Overall responsibility for illicit tobacco sits with Customs, which mainly operates at the border and is focused on excise evasion, while police have a role in supporting enforcement, investigations, and prosecutions.
“The individual agencies are doing their roles well and there is good co-operation around operations and local initiatives, but we need to bring all of these powers and resources together as effectively as we can to stop this black market.”
She asked the agencies to develop an operational plan to address the importation, storage and distribution, and sale of illegal cigarettes. An action group has been developed to co-ordinate the operational response and a senior official’s group is responsible for oversight.
Costello said in the announcement that the operational response was immediate, while health officials were also working on improving the legislation around tobacco control.
Costello noted the paper in a health select committee on Wednesday, when National MP Carlos Cheung asked for an update on the second tranche of legislation to address youth vaping, which includes reforms to the regulation of oral nicotine products.
Costello did not provide any progress, instead saying the Government was looking to level the control it had over vapes and nicotine, saying vapes are currently subject to stricter controls than tobacco.
Costello’s office declined to provide an update on reforms to the regulation of oral nicotine products, saying there was no paper to talk to yet.
As part of coalition agreements from NZ First, the Government has agreed in principle to explore legalising the products for sale.
Labour banned the sale of nicotine pouches in 2020, but it’s still legal to import from overseas as long as it is for personal use.
In a 2024 Cabinet paper, Costello recommended the Government back the sale of smokeless tobacco and nicotine products in principle, provided they were shown to be less harmful than smoking and were regulated to meet safety requirements and prevent access by young people.
Public health research fellow Calvin Cochran from Otago University wanted to see strong penalties for anyone caught importing and selling illicit tobacco.
He said it was important to ensure authorities were working together and had the right enforcement powers to detect and tackle the issue of illicit tobacco.
He also argued that the best way to reduce the potential for an illicit market to grow is to reduce demand for smoking.
He criticised the Government’s decision to get rid of smokefree laws, saying a crackdown could be made easier if the Government put efforts into urgently helping people quit smoking.