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If you dig into the history of drug/alcohol smuggling in the US, a lot of what you come back to is one branch of the US government doing the enforcement and another branch using black market trade as an illicit money laundering / revenue scheme. I would not be shocked to discover that a bunch of that Australian black market activity is a feature of prohibition rather than a bug. But again, that goes back to the real goals of prohibition. Is this an effort to curb cigarette consumption or just a means of implementing a shake-down of retail consumers?
They have. And gallons of ink have been spilled illustrating why certain policies are more successful than others.
But there's different measures of success. Again, to go back to Nixon, the goal of nationally prohibiting weed consumption wasn't to keep people from ingesting THC. It was to target sections of the college youth and antiwar movements who preferred weed over booze. In that sense, the policies didn't backfire. They functioned exactly as designed.
There was a big rash of Boomer-era cigarette deaths that left a serious psychic wound in the GenX / Millennial generation. I grew up watching older family members suffer and die from lung cancer. It heavily influenced more proclivity to smoke. And I've got more than a few peers who could say the same.
But Zoomers/Alphas have "vaping" now, plus an abundance of marketing and propaganda intended to tell them that this kind of nicotine consumption is actually harmless. They didn't grow up watching older family members huddling over oxygen masks and spitting up black snot all day and dying in their mid-50s to three-pack-a-day habits.
I think living through that shit has incentivized the idea of cigarette taxes as a remedy. But its the drop in consumption that made taxation possible in a way that - say - a higher gasoline tax to fight climate change or a higher income tax rate to fund universal Medicare/caid isn't.