Victoria promises 'toughest penalties' in the country amid escalating tobacco trade war

The Victorian government is set to implement the toughest penalties in the country, introducing legislation into parliament to combat the rising illegal tobacco trade.

Premier Jacinta Allan said the legislation would establish a tobacco business licensing scheme, meaning retailers could be refused a licence based on previous history.

It comes as a convenience store store was targeted twice in the past 24 hours in Melbourne's north.

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Under the legislation, police will also be given stronger search powers, meaning it will be easier and quicker to execute a raid.

A tobacco regulator will be established, with inspectors working alongside police to administer the licensing scheme.

This will include the power to search shops, suspend licences and seize illegal items.

"Victoria Police has been tireless in its work to disrupt and dismantle organised crime," Police Minister Anthony Carbines said.

"These new search powers will give police new ways to crack down on crime lords and keep the community safe."

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Allan promised that anyone caught breaking the new laws would face the toughest penalties in the country.

Individuals will also face fines of more than $355,000 or up to 15 years in jail, while businesses will face fines of more than $1.7 million.

"We're implementing the toughest laws anywhere in the country to smoke out the illegal tobacco trade and keep Victorians safe," Allan said.

Tougher penalties will come into effect immediately when the Bill passes.

The rollout of the new licensing scheme will start from the middle of next year.