Important update for landlords: New tobacco licensing laws in NSW and lease termination rights

The NSW Government has recently passed major changes to tobacco laws that directly affect landlords leasing premises to retailers and wholesalers of tobacco and non-tobacco smoking products.

What’s changed?

As of 1 July 2025, the NSW Tobacco Licensing Scheme is officially in effect. This means:

• All retailers and wholesalers of tobacco and non-tobacco smoking products in NSW must hold a valid tobacco licence. This replaces the previous Retailer Identification Number (RIN) system and introduces stricter compliance requirements, including criminal background checks and mandatory display of licences at the point of sale.
• A separate licence is needed for each physical or online premises where tobacco or non-tobacco smoking products are sold.
• Licences must be renewed annually.

New penalties have been introduced for selling tobacco or non-tobacco smoking products without a valid licence. The maximum penalties are:

• $11,000 for a first offence for an individual, or $44,000 for a second or subsequent offence for an individual.
• $220,000 for a corporation.

The penalties for other tobacco-related offences have also been significantly increased to reflect how seriously these breaches are now treated.

In NSW, only pharmacies are allowed to sell vaping products, and only when they’re intended for medical or therapeutic use. Pharmacies are exempt from needing a tobacco licence for these sales. All other retailers—including tobacconists, supermarkets, and convenience stores—are banned from selling any kind of vaping product, whether it contains nicotine or not.

Grace period for tenants

To help businesses adjust, the government has introduced a grace period:

• Tenants have until 1 October 2025 to submit a valid licence application.
• If an application is submitted on or before 1 October, the business can continue trading while their application is being processed.
• If the application is refused, the business must stop selling tobacco immediately.
• If no application is submitted by 1 October, the business must cease trading tobacco from 2 October 2025 until a licence is granted.

This grace period gives landlords time to check that their tenants are taking steps to comply with the new laws.

New powers for landlords

One of the most significant changes for landlords is the introduction of lease termination rights where a tenant is found to be selling illicit tobacco or operating without a valid licence. 

The Tobacco Legislation (Closure Orders) Amendment Bill 2025 (Bill) includes the new lease termination powers to be inserted into the Public Health (Tobacco) Act 2008. The Bill was given royal assent this week. 

The legislation has introduced the following changes: 

• If a closure order is issued against a premises (for example, due to illegal tobacco sales), the lease is automatically deemed to include a clause allowing the landlord to terminate the lease. Closure orders can be issued on a short-term basis (up to 90 days) or a long-term basis (up to 12 months).
• The landlord can terminate the lease by giving at least 28 days’ written notice.
• The termination is treated as if the tenant has repudiated the lease, meaning the tenant has broken a fundamental term of the agreement.
• Allows landlords to terminate leases affected by closure orders without tenants having access to mediation, dispute resolution, or compensation rights under the Retail Leases Act 1994, Small Business Commissioner Act 2013, or Real Property Act 1900.
• Tenants cannot sue the landlord for terminating the lease under this provision.

These powers will apply to both leases and licences, whether they were signed before or after the new laws came into effect.

What landlords should do

If you lease premises to a tobacco retailer:

• Confirm that your tenant holds or has applied for a valid tobacco licence – request proof of licences regularly.
• Monitor compliance with tobacco laws, especially if you suspect illicit activity.
• Act promptly if a closure order is issued – your right to terminate the lease is now legally protected.

The NSW Government is also now consulting on further offences for landlords who knowingly lease premises to illegal tobacco sellers. This means future laws may impose penalties on landlords who turn a blind eye to unlawful activity.

As a landlord, it is important to stay informed and proactive. By taking these steps, landlords can safeguard their properties, support lawful business operations, and reduce exposure to significant fines or penalties related to unlicensed sales.

Please don’t hesitate to reach out if you would like assistance with tenant communications or reviewing your lease terms in light of this update.

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Authored by: 

Lui Scipioni, Partner
John Nicolas, Partner
Alexandra Walker, Partner
Michael Mercier, Partner
Maria Anenoglou, Special Counsel