This may come as no surprise

RNZ reports:

An RNZ investigation into the tobacco blackmarket found packs of cigarettes and loose tobacco being sold brazenly over the counter at heavily discounted prices.

By law, cigarettes have to include pictures and health warnings covering at least 75-percent of the front of the packs. But the cigarettes being sold on the blackmarket are a throw back to the 1990s of glossy, embossed packaging and no ugly health warnings.

They continue:

Illicit cigarettes are being sold in Auckland without the warnings, with some going for as cheap as $13 a pack, less than a third of the price of a packet that includes excise tax.

An East Auckland shop visited by RNZ is selling 15 different packs of cigarettes. Only one carried the mandated health warnings.

Great that RNZ is starting to understand what's going on. 

Here's RNZ in 2024, quoting academics suggesting that claims about the illicit market were all down to industry influence. 

Smokescreen: Expert rubbishes govt claim of black market over smokefree legislation
...

But University of Auckland professor Chris Bullen said since the Smokefree Aotearoa goal came in in 2011, there had been no increase in the proportion of illicit tobacco products, and the absolute size of the illicit market had declined.

"We haven't seen that in New Zealand over more than a decade of increasing the price of tobacco. In fact, all of the evidence points to a decline. That may be in part due to a reduction in demand for cigarettes, because much fewer people are smoking, and they're smoking fewer cigarettes."

Tobacco companies have to declare to the Ministry of Health what was being released into New Zealand.

"By looking at the last 10 years of those records, the volumes of tobacco, reflecting demand for it, have been dropping quite dramatically. Smokers also report smoking less. The gap between what the tobacco companies release into the market and what people say they're smoking is also declining, suggesting that while there is illegal tobacco in the country, it's not increasing," Bullen said.

Bullen said the government should implement the legislation, and support Customs to continue to keep illicit products out of the country.

The claim of a rising black market was also used by the tobacco industry.

Bullen said the argument was a "zombie argument" that refused to die, and that politicians needed to think hard about repeating arguments used by the industry.

"The tobacco industry, it's in its interests to claim that things are bad so that the government takes its foot off the tobacco control accelerator pedal.

"They want to keep selling more product, they don't want the volumes of tobacco to be going down, because that would mean losing business. It's in their interest to have political support, whether it's conscious or unconscious, intentional or unintentional, for slowing the game down."

He has urged the government to keep the smokefree legislation.

"I just think unfortunately this government has been scared off, or persuaded by voices directly or indirectly from industry, that meant we're not going to see the best outcome here. And that will play out in the ongoing misery and premature death for thousands of people who shouldn't have experienced that if the existing act was allowed to play out over the next few years."

Australia's black market problem has been obvious for years.

Australia has been deporting gang members across the Pacific. It's dispersion of the tacit knowledge of how to run an illicit cigarette industry.

Fronting the fixed cost of establishing illicit supply channels to Australia meant the only thing to sort out at the NZ end was how to get it into the country, not where to get it from. 

It was always going to be a worsening problem here.

Labour's proposed policy package, endorsed by Bullen, included Very Low Nicotine Content rules. 

Those rules would have made the illicit market the only place to find tobacco with any appreciable nicotine content. Recall that the allowed nicotine levels in VLNC cigs are equivalent to a 0.2% alcohol maximum for beer. It's the equivalent of prohibition, for those who remember that US prohibition allowed near-beers with very low alcohol content. 

Consider how much worse the illicit market problem would have been if the current government had maintained Labour's tobacco policy package.