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The powerful crime syndicate controlling the nationwide illicit tobacco cartel is now forcing legitimate cigarette shops to pay the notorious “Kaz tax” to continue operating.
“The Commission”, which was founded by exiled gangland boss Kaz Hamad, has been demanding cash payments from independent retailers who are not even involved in the illegal trade in a bid to extract millions of dollars in new income.
The ambitious takeover plan has been reinforced by a spate of arson attacks over the past two weeks that have targeted shops from inner-city Richmond to coastal Mentone, and the regional town of Warragul.
The escalation comes as the state regulator, Tobacco Licensing Victoria (TLV), has become paralysed by staff departures and infighting with other agencies, as well as the failure of the state government to pass critical legislation needed to crack down on unlicensed operators.
The latest firebombing in Richmond on Monday destroyed a tobacco retailer and nearly a dozen neighbouring shops along Victoria Street in what has been one of the most damaging attacks to property of the more than three-year old “tobacco war”. Containing the blaze took 80 firefighters and 25 trucks.
It comes as other tobacco sellers have reported receiving demands, including one Mentone shop operator who found a potential extortion note pinned to their door before it was destroyed in late June.
Two police sources, who cannot be identified speaking about operational matters, said intelligence suggested the syndicates were now extracting the so-called “Kaz tax”, even from tobacco retailers who do not sell illicit cigarettes.
Hamad’s business model was previously only to “tax” retailers who sold illicit brand cigarettes, such as UAE-made Manchester and Chinese-made Double Happiness, and illegal vapes, most of which were also imported by the gang.
This masthead has previously reported that the syndicate believed that being involved in the illicit trade made them “fair game” to be stood over.
The Kaz tax was initially $2000 a month when it began being enforced in 2023, rising to $5000 a month in 2025 after Hamad established a nationwide cartel following more than two years of violence.
The illicit tobacco market is worth more than $8.5 billion nationwide. Blacket market products now account for 80 per cent of nicotine consumed in the country, according to the Australian Bureau of Statistics.
Last year, Hamad was estimated to be reaping more than $1 million a month off the tax.
Police sources said the street-level extortion scheme has proven so lucrative that the syndicate has seen an opportunity to force independent retailers who sell legitimate “big tobacco” brand cigarettes to also pay to continue to operate.
This has included small regional grocers with no connection to the illicit tobacco market but who are the major sales point for cigarettes in their communities.
The new extortion model has been operating since last year, with most shop owners complying rather than face attacks.
Hamad was arrested in Iraq by local authorities in January and his current location is unknown. The illicit market was embroiled in a nationwide burst of violence as other groups attempted to push into the lucrative business but were allegedly repelled by Hamad’s gang, the 313.
The further penetration of organised crime into the market comes despite Tobacco Licensing Victoria’s crackdown on the illicit market, now in its sixth month.
Three sources with direct knowledge of TLV’s operations, speaking on the condition of anonymity, have slammed the agency as ineffective, poorly run and unable to meet its basic objectives.
Court records show TLV has not launched any criminal prosecutions.
The regulator did not respond to questions about its operational issues.
“We have already suspended 13 licences, issued 59 infringement notices worth almost $363,000 and seized more than $9 million worth of illicit tobacco,” a spokesperson said.
In contrast, Victoria Police seized a single truck carrying $5 million worth of tobacco in one operation in mid-2025.
TLV has instead focused its inspections on “low-hanging fruit” such as convenience stores, supermarkets and petrol stations to meet its compliance and licensing objectives, the sources say.
There are believed to be 8000 retailers selling tobacco across the state, of which close to 20 per cent are blackmarket operations.
There has also been a breakdown in communication and co-operation between the regulator and partner agencies such as Victoria Police.
Since launching in February, several senior officials at the regulator have left. One top role, the director of compliance and enforcement, is now being advertised with a salary of nearly $300,000.
A restructure inside TLV is looming, sources say.
Despite pledging in March to give the agency power to shut down shops, the legislation is still sitting in parliament after being introduced only in early June.
Parliament is now on break until late July, but it remains unclear when the promised changes will become law.
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