Landlords proposed to gain new powers under Queensland’s crackdown on illegal tobacco trade

The Queensland Parliament recently introduced the Tobacco and Other Smoking Products (Dismantling Illegal Trade) and Other Legislation Amendment Bill 2025 (Bill), a sweeping reform aimed at curbing illegal tobacco and nicotine trade across the state.

Building on recent regulatory changes, from 1 September 2024, it became a requirement for any retailer or wholesaler of smoking products including vapes to hold a smoking product supplier licence. The Bill marks a significant shift in Queensland’s approach to tobacco regulation proposing stronger enforcement powers for health authorities in addition to new obligations and rights for landlords leasing premises to such retailers and wholesalers.

Closure Orders and Lease Termination Rights

The Bill is designed to crack down on the illicit tobacco and vaping trade. Among other things, it introduces:

• Offences for landlords who knowingly lease premises to tenants engaged in illegal tobacco or nicotine product sales (including vapes)
• Expand powers to allow the chief executive of Queensland Health to shut down non-compliant businesses via a short-term closure order for up to 3 months (previously 72 hours). The Bill also broadens the grounds for a closure order to include the possession of illicit tobacco or illicit nicotine products, in addition to their supply
• Expand powers to allow a Magistrate to order the closure of premises for up to 12 months (previously six months)
• The right for landlords to terminate a lease if the premises are subject to a closure order
• Expand existing seizure and forfeiture powers to allow authorised persons, when seizing illicit tobacco and illicit nicotine products, to also seize legal smoking products
• Higher penalties for all involved in illicit tobacco supply, including property owners who are complicit or turn a blind eye to illegal activity.

The provisions that propose to affect landlord rights are explained in further detail below.

Landlord rights: Termination of lease

As noted above, the Bill introduces a power that allows a “relevant lessor” to terminate a commercial lease where a closure order has been issued in relation to the premises. This provision empowers landlords to swiftly disengage from tenants involved in unlawful tobacco activity, protecting property owners from reputational and legal risks. The termination powers are intended to apply to closure orders made after the commencement of the legislation (assuming it is approved) but will apply to leases entered into before or after commencement of the legislation.

For the purposes of the Bill, lease is broadly defined to include a right to occupy the premises and can include a sublease. The lease itself is not required to be in any particular form, written or registered.

The term “relevant lessor” refers to a person who either directly leases the premises to someone operating a tobacco business, or otherwise directly permits that person to occupy the premises for the purpose of conducting a tobacco business. This does not include, for example, a head lessor who leases the premises to an intermediary, who then subleases it to the tobacco business operator. Accordingly, the term is intended to identify the person who holds a direct legal relationship with the non-compliant business.

Closure orders can result in significant financial consequences, such as when the offending business accrues rental arrears or the premises remain vacant and cannot be re-leased. They may also negatively impact the value of nearby properties and pose reputational risks for the landlord. The statutory termination power is designed to ensure that landlords are not unfairly burdened by a closure order arising from the unlawful conduct of their tenant.

The Bill requires the chief executive to provide the landlord with a copy of the closure order, along with a notice outlining the availability of the statutory termination power. This notice will include an approved form that the landlord may use to terminate the lease by serving it on the tenant. The termination date must be at least 14 days after the day the landlord gives the tenant the termination notice.

The Bill makes it clear that, as long as the termination notice is issued while the closure order is in force, the landlord may rely on the protections of the termination power, including a bar on claims by or proceedings initiated by the tenant – even if the closure order is subsequently lifted, revoked, or deemed invalid.

Importantly, the Bill introduces a range of rights in favour of landlords who validly exercise the statutory lease termination power. Such termination is treated as if the tenant has repudiated the lease, preserving all rights and remedies available to the landlord in those circumstances. This includes the right to claim damages or recover a rental bond. After the termination date, the landlord may also remove and dispose of any property left on the premises by the tenant, including fit-outs, chattels, fixtures, fittings, and personal possessions. These provisions are intended to alleviate the financial impact on landlords and encourage the use of the termination power as an effective means to disrupt illegal activity.

Landlord liability: A new offence

The Bill also introduces a new criminal offence for landlords who knowingly permit illegal tobacco or nicotine supply or possession on their premises. If a landlord is aware that a tenant is selling illicit tobacco or nicotine or operating without a licence and fails to act without a reasonable excuse, they may face penalties under the new laws.

Examples of a reasonable excuse may include where:

• A franchisor is actively taking steps under the Franchise Legislation to terminate a franchise agreement.
• The landlord did not receive notice of a closure order from Queensland Health and had no reason to suspect illegal conduct; or
• Other extenuating circumstances beyond the landlord’s control explain the continued occupation by the offending tenant.

The maximum penalty for this offence is 1,000 penalty units, one year’s imprisonment, or both.

The Bill also allows the chief executive to apply to the court for a civil penalty order if they reasonably believe that a landlord allowed another person to use the premises for the supply or possession of illicit tobacco or illicit nicotine products in connection with a business, without a reasonable excuse. It is not necessary to prove actual knowledge for the civil penalty to apply. The penalty targets situations where a landlord has been recklessly indifferent to the illegal activity or has neglected to take reasonable measures to prevent it, despite clear warning signs or chances to intervene. The maximum penalty for a civil contravention is the equivalent of 1,000 penalty units for an individual and the equivalent of 5,000 penalty units for a corporation.

What landlords should do

If you lease commercial premises to retailers who sell cigarettes, vapes or similar products you must:

• Do your due diligence – check if your tenant has a valid licence
• Update your lease agreements – in particular, include clauses that require tenants to comply with all tobacco-related laws and termination rights if the relevant approvals have not been obtained
• Avoid turning a blind eye, and take action if there is illegal trading – if authorities believe you were aware (or should have been aware) of illegal trading and failed to act, you may be liable.

By enabling lease termination and introducing landlord liability, the legislation aims to dismantle the infrastructure supporting illegal tobacco trade and ensure compliance across the retail sector.

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