In its latest push to curb a surging underground tobacco and vape market, the NSW government will move a bill that would punish the landlords with up to one year of imprisonment or a fine of up to $165,000.
"We know that the vast majority of landlords do the right thing - but those bad actors out there not only undermine legitimate business, they also expose communities to criminal activity," Health Minister Ryan Park said.
"This measure will further minimise the opportunities for illegal tobacco and vape sales to flourish."
The new offence that would be created would require the landlord to know an illicit tobacco or vape store was running out of their building, but allow it to continue rather than contacting authorities.
Mr Park on Wednesday touted early returns on the crackdown as it shut two shops in Sydney's north for 90 days for selling illicit vape and tobacco products.
These stores can be forced to close for up to 12 months under new powers if a breach is found.
Since January 1, NSW Health has seized more than 11.8 million cigarettes, more than 2000kg of illicit tobacco products and some 170,000 illegal vaping goods.
During the same period, 17 court prosecutions have been finalised regarding tobacco and vape sale offences, with total fines of almost $600,000 handed down.
Mr Park said punishing landlords highlighted the important role they could play in stopping the flow of illegal products to the market.
"These penalties are the result of extensive consultation and will strike a fair and reasonable balance that ensures we target landlords who are knowingly permitting illegal activity," he said.
A report released on Friday showed illegal tobacco was burning a $4 billion hole in Australia's hip pocket.
The economic cost of organised crime to Australia jumped to $82.3 billion in 2023/24, up from $68.7 billion in the previous 12 months, reports from the Australian Criminal Intelligence Commission and Australian Institute of Criminology show.
Illicit tobacco's estimated economic cost rose to $4 billion, a fourfold increase across the past three years.
But tobacco control policy experts argue reducing the tax on cigarettes to compete with illicit sellers won't fix the problem.
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