Five people have been arrested and 1.38 million illegal cigarettes seized in a series of raids at dairies and homes across the North Island.
Authorities carried out 21 raids at eight retail outlets and six residential addresses in Rotorua, Waikato and Auckland as part of the six-month operation.
The operation, dubbed Operation Clarify, was led by Customs, with support from police and Health New Zealand
Customs estimated that 1.378 million cigarettes, representing more than $2 million in evaded tobacco excise, were seized. Around $170,000 in cash was also seized.
Most of the seized cigarettes were believed to have originated from Asia.
The majority of the businesses raided were dairies, with one described as a "pop-up" for selling contraband.
Investigators also found seven storage locations where illegal tobacco products had been stockpiled.
Five people were arrested and face charges of possession or custody of uncustomed goods, and sale and distribution of uncustomed goods.
Authorities said there was evidence indicating plans to expand distribution by recruiting more retailers.
Customs Assistant Comptroller for intelligence and investigations Terry Brown said there was “potentially a gang association” among those arrested, but it was "too early to say".
He said Customs will be seeking the maximum sentence of imprisonment for those charged, should they be convicted.
The operation followed an anonymous tip-off reported through CrimeStoppers in late 2025.
Brown said Health New Zealand provided “valuable intelligence” which confirmed an illicit tobacco network was operating in the Rotorua, Waikato and Auckland areas.
“Operational support from Police has enabled us to act on multiple search warrants yesterday and earlier today involving raids on nearly two dozen locations, as well as assisting with related arrests,” he said.
New Zealand’s director of public health, Dr Corina Grey, said illegal tobacco undermined efforts to reduce smoking rates by making cigarettes cheaper and more available.
“Our priority is protecting New Zealanders’ health. Illicit tobacco undermines that, which is why agencies are working together to respond in a more coordinated way.”
Police, Customs, and Health NZ said they were dealing with “fast-moving, organised players” who were undermining legitimate businesses and taxpayers.
Police Superintendent Sunny Patel said: “We know that illicit tobacco networks, such as those identified in Operation Clarify, are in it to profit from their illegal activity and create harm across communities.”
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