A Councillor, a Tobacco Shop, and a Growing Black Market

Topic: Smoking

Wednesday, 17 June 2026, at 6:31 am

An election poster is outside the Muswellbrook TSG.

In short:

A regional NSW councillor manages a tobacco shop selling illegal cigarettes, and experts warn the crisis is deepening outside major cities.

An ABC investigation found that Muswellbrook, with 16,000 residents, has at least six shops selling illegal tobacco, including the one linked to the councillor.

What's next?

Muswellbrook Council declined to investigate and referred the ABC to its code of conduct, stating it's the personal responsibility of council officials to behave appropriately.

A NSW regional councillor manages a tobacco shop that sells illegal cigarettes.

Rohit Mahajan was elected as a councillor in Muswellbrook in 2024.

Council documents state he is the manager of TSG Muswellbrook.

The ABC bought illegal cigarettes from the shop for $15 on April 30.

Do you know more about this or have a similar story? Email turner-cohen.alex@abc.net.au

Cr Mahajan said he had no option but to sell the illegal product when asked by the ABC last month.

He said, 'Definitely, we sell it.'

'Too many shops are opening in that area. What we gonna do if we don't sell that kind of cigarette? We can't survive.'

Rohit Mahajan is listed as a manager at the TSG in Muswellbrook.

Cr Mahajan backtracked on his comments, saying he spoke in general terms about small businesses in Muswellbrook.

Cr Mahajan became involved in politics due to his interest in the government's tobacco excise policy.

Despite having only 16,000 residents, Muswellbrook is home to at least six shops with a supply of illicit tobacco.

The TSG tobacco station in Muswellbrook is managed by Rohit Mahajan and owned by his brother-in-law.

Council not investigating

Muswellbrook Council said it was not the regulatory authority and suggested referring the matter to police.

Muswellbrook Council referred the ABC to its code of conduct and declined to carry out its own investigation.

Experts say tobacco is becoming a bigger problem in regional NSW.

Cr Mahajan has submitted plans to open a 100-place, $1.9 million childcare centre in Muswellbrook.

He works at Muswellbrook TSG and owns the building the shop is in.

The company's owner is Canberra man Pankaj Monga, whom Cr Mahajan says is his brother-in-law.

Pankaj Monga is also a committee member on the AIBC.

Mr Monga is listed as a committee member of the Australia India Business Council.

Mr Monga was contacted for comment.

'Utterly untenable'

State member for Upper Hunter, Dave Layzell, said it was unacceptable for anyone to engage in illegal behaviour.

He said someone who does so would undermine other small businesses in the town by running an illegal tobacco business.

He said there had been an explosion of tobacco shops in Muswellbrook.

A faded green 'Dave Layzell' sign marks the state MP's old office, now next to a tobacconist in Muswellbrook's main street.

Barnaby Joyce said if it was true that Cr Mahajan managed a shop that sold illegal tobacco, it was alarming behaviour for an elected councillor.

He said regional Australia was 'easy pickings' for the illegal tobacco trade.

A photo taken during a raid on an illegal tobacco operation.

Australia's tobacco black market has exploded in recent years and is now estimated to be worth up to $7 billion annually.

A whopping 80 per cent of all nicotine consumption in 2025 came from 'illicit sources'.

Nicotine is the third-most popular recreational drug in the country after caffeine and alcohol.

Nicotine is now worth more to criminals than cannabis, cocaine, heroin, and ecstasy combined.

Last month, the federal excise on tobacco rose a further 5 per cent on top of regular indexing.

At $1.53 per cigarette, Australia has one of the highest tobacco excises in the world.

The ABC visited six stores in Muswellbrook and was able to buy illegal cigarettes at each for between $15 and $20 a pack.

Dr James Martin says the black market tobacco trade is growing at an enormous rate.

A pack-a-day smoker would look at a yearly bill of $15,000 if they did not turn to the black market.

That 'is simply unaffordable, for most people, particularly lower socio-economic groups, which are disproportionately concentrated in regional areas'.

Regional communities continue to outpace cities in smoking rates.

The most recent data from the AIHW show that one in five people living in remote and very remote areas of Australia in 2022–2023 smoked daily.

A Senate inquiry into the illegal tobacco crisis last month heard from NSW business owners who claimed it was a crisis in the regions.

David Allen said the trade was destroying legitimate retailers and warned the legal cigarette market would be all but wiped out within two years.

'We have lost 85 per cent of the cigarette and tobacco trade in our bottle shop.'

'Own goal' on smoking rates

In 2023, Health Minister Mark Butler declared smoking rates had flatlined, vowing to do more to drive them down further.

Dr Martin said the Australian government had achieved an 'extraordinary own goal' with early evidence pointing to Australia's smoking rate actually increasing for the first time.

Although there is no current large-scale data available to determine if smoking uptake is on the rise.

Mr Butler referred the ABC to Assistant Minister for Customs Julian Hill, who said that enforcement measures were 'having an effect on the illicit trade'.

Mr Hill pointed to the Queensland government's response, saying there was 'very early evidence' showing that strong closure powers and landlord penalties were making nicotine users 'return to the legal market'.

Other jurisdictions can learn from Queensland, where enforcement efforts have focused on shutting down 100 per cent of the dodgy shops.

Several businesses in regional NSW have been slapped with closure orders under what the state government described as 'tough new' powers introduced in November.

The new rules give NSW Health the power to issue short-term closure orders of up to 90 days against businesses caught selling tobacco illegally.

As of May 29, NSW Health had issued 294 short-term closure orders since the new powers came into effect.

Several have been issued in regional NSW areas, including the Mid North Coast, Wagga, Armidale, and Upper Tweed Shire council areas.

NSW Health conducted a blitz on the NSW Central Coast in April, closing 23 retailers.

Another blitz took out five retailers in Cessnock's main streets recently and seized more than $260,000 worth of illicit tobacco and vapes.

No closure orders have been issued in Muswellbrook.

NSW Health responds

NSW Health declined to comment on individual cases and sent the ABC a statement that repeated information from previous media releases.

'Prosecutions for retailers who continue to trade from closed premises are underway.'

'As a result of our enforcement operations, premises subject to comprehensive compliance measures often cease their illicit activities or remain permanently closed.'

New laws intended to target landlords who knowingly permit tenants to sell illicit tobacco and vaping goods from their premises passed parliament in May.

The new offence can lead to a year in jail, a $165,000 fine, or both.

NSW Health Minister Ryan Park said those laws, due to come into effect soon, would make 'doing the wrong thing even harder'.

Landlords who knowingly allow tenants to sell illicit tobacco and illegal vapes from their premises are not only undermining legitimate business operations.

NSW Police declined to comment and referred the ABC to NSW Health.

Wednesday, 17 June 2026, at 6:31 am

Wednesday, 17 June 2026, at 9:51 am