Australia’s nicotine laws have been a significant feature of Australian political debate in recent years, driven by community concern about an ‘explosion’ in vape use by young people and tobacco, and retail industry concern about the apparent failure of current Australian regulations to control a growing black market for illegal tobacco products.

The election of the Albanese Government brought this debate to a head with the incoming Federal Health Minister announcing that the Therapeutic Goods Administration (TGA) would undertake a review of the current regulations governing the sale of nicotine vape products in Australia.

The announcement followed an earlier decision by the former Morrison Government to only allow the sales of nicotine vapes on prescription from a pharmacy from 1 October 2021 – effectively banning the sale of vapes containing nicotine by all Australian retailers.

It soon became apparent, however, that State and Territory regulators had no easy method for determining whether vapes being sold by retailers – including convenience stores – contained nicotine. The community health lobby, the tobacco industry and the convenience industry all acknowledged that a black market for nicotine vapes had developed and that the current laws were not sufficient to keep nicotine vapes out of the hands of children.

Where these stakeholders differed, however, was the solution to the problem.

The community health lobby suggested that all Australian Governments needed to develop tougher penalties and improved enforcement practices to (a) prevent the importation of nicotine vapes, and (b) prosecute businesses that sell nicotine vapes.

The tobacco industry, and some elements of the Australian convenience industry, argued that the extent of the black market was such that the proverbial ‘horse had bolted’ – and therefore the best solution was to legalise the sale of the products to make the market more transparent and easier to regulate properly.

The central weakness of such an argument is the explicit admission that a sizeable portion of retailers, including convenience stores, were doing the wrong thing – and therefore that the wrong thing should be made the right thing by changing the existing laws.

The merits of both arguments were assessed by the TGA inquiry which commenced in late November 2022. The express purpose of the review was to seek “public comment on potential reforms to the regulation of nicotine vaping products in Australia. The potential reforms are aimed at preventing children and adolescents from accessing nicotine vaping products, while supporting access to products of known composition and quality for smoking cessation with a doctor’s prescription”.

In launching the inquiry the TGA noted that “Children are continuing to access nicotine vaping products in higher numbers, and many adults are accessing them on the black market, rather than lawfully with a prescription from an Australian registered doctor”.

Some industry advocates appear to have wrongly interpreted the review as being an opportunity to argue for the legalisation of the retail sale of nicotine vapes given the growing black market for nicotine vapes, despite the explicit purpose of the TGA Review cited above.

In any event, the findings of the TGA Review were delivered to the Federal Health Minister, the Hon. Mark Butler, in late March.

This week, having considered these findings, the Australian Government announced a tougher regulatory regime that would ban the importation and sale of all vapes – regardless of nicotine content – other than for use as a medicinal aid sold by pharmacies on prescription from a doctor.

The measures announced this week were included in a total package of measures that included a budget allocation of more than $230M to discourage the use of vapes in the community, strengthen import controls, and to working with State/Territory governments to prosecute retailers that sell vapes in the future. Measures were also announced to address the sale of illicit tobacco and the government foreshadowed an increase in the tobacco excise in the Federal Budget next week that would increase the excise at the rate of 5% per year over the next 3 years.

“The most disappointing aspect of this whole debate has been the reputational damage done to our industry, with politicians suggesting that our industry has knowingly and illegally sold nicotine vapes to children, said ACAPMA CEO Mark McKenzie.

“The target of these reforms are the importers and the vendors, not consumers. “It is already illegal to sell vapes to under 18-year-olds, yet convenience stores and online retailers have flouted these regulations by falsely selling nicotine-containing products as “nicotine-free”, Minister Butler said this week.

“There’s going to have to be a set of strong penalties against vendors who breach this new law … we want to see this stamped out, there should not be a product being sold in retail settings to kids alongside lollies and chocolates,” the Minister added.

So where to from here?

“The answer is simple. We have an absolute obligation to work co-operatively with all Australian governments to develop a set of enforceable regulations that will stamp out the current black market for vapes and other nicotine products – to support the government in the protection of children”, said Mark.

“Arguing that it is all too hard, or that there is nothing that we can meaningfully do as an industry to help, simply won’t cut it”, added Mark.

These new reforms risks further incentivising the current black market. Our industry must therefore work with all Australian Governments (i.e. Federal, State/Territory and Local government), the community health lobby, and other retail industries to advance solutions that address all aspects of the current illicit tobacco market in Australia.

“We must demonstrate that we can be trusted as a retail industry to follow the law – not just to protect the health of children, which must be the primary goal, but also to ensure that competition in the Australian P&C remains fair and equitable, concluded Mark.

While ACAPMA has not participated in this particular debate to date, the Association has reached out to key government agencies this week to offer assistance with the design of meaningful and effective regulations. This work will now be a key focus of ACAPMA’s advocacy activity over coming months to ensure that the new regulations are effective in managing both the national health risk and the industry competition risk.