AUSTRALIA'S largest tobacco franchise could be in breach of state laws by giving away free cardboard cigarette sleeves designed to cover plain cigarette packs.
The Tobacco Station Group, which has more than 300 stores nationally, is offering the covers, which feature the company's logo and web address, free to customers who buy tobacco products in their outlets.
Fairfax understands that under the Victorian and NSW tobacco acts, retailers are prohibited from offering customers a gift with the purchase of any tobacco product.
The federal Department of Health and Ageing is investigating whether the products breach federal tobacco laws and has advised its state and territory counterparts to do the same.
''[States] and territories have enacted legislation prohibiting promotional schemes for tobacco products - that is, offering gifts, prizes … in association with the sale of tobacco products,'' a spokeswoman for the department said. ''It is therefore a matter for consideration by states and territories.''
The Victorian Department of Health said it was also ''investigating whether the Victorian Tobacco Act is being breached''.
A spokeswoman for the Tobacco Station Group confirmed the covers were available at all of its outlets and said it was ''of the opinion that the cases comply with the new Australian plain packaging legislation''.
When Fairfax visited a Tobacco Station Group outlet, covers were displayed in a box on the counter. A man behind the counter said they were supplied ''from the company''.
The man said the covers were free. When pressed for further details, he declined to comment.
It is not the first time the federal government has investigated a product designed to hide the graphic health warnings on plain packs, which are three times larger than the previous warnings.
In December a Gold Coast sticker manufacturing company launched a range of custom stickers that wrap around cigarette packs. The Box Wrap stickers, which have the marketing slogan ''It's your box, it's your choice'', feature a range of images, including the Australian flag and scantily clad men and women.
In this instance the department found the company was not in breach of federal tobacco laws.
Under the legislation, tobacco companies are prohibited from selling cigarette packs with cases or covers that hide the plain packs and promote smoking or tobacco products. However, it is not an offence for a company to sell a cover or case if it is sold separately to the cigarette pack, is not applied at the time of supply and does not contain any tobacco product advertising.
The president of the Australian Medical Association, Steve Hambleton, condemned Tobacco Station Group's decision to offer the free cigarette covers.
''This is a tobacco group virtually saying 'we think this [plain packaging] is going to work, so we are going to go out and try and defeat it','' he said.
But Garrett Gunn from Siggy Sleeves, who co-developed the covers being distributed by Tobacco Station Group, said the sleeves were not created to ''diminish the effects of the government warnings''.
Rather, he said, they increase the impact of the warnings on smokers while protecting non-smokers from the shocking images.
''To actually get a cigarette out, you have to pop it up through the top of the sleeve - and at that time, the graphic warning is right in the face of the smoker,'' he said. ''But then you can put it back in and leave it on the table without someone being ill while they're trying to eat.''
The federal Health Minister, Tanya Plibersek, said the government would ''use every legal means to prevent'' industry members who try to circumvent the legislation.
She said the government had so far received 15 complaints about retailers, mostly small shopkeepers, who had been flouting the regulations.