WA's lucrative sandalwood industry is set for a big shake-up amid fears illegal harvesting is pushing the fragile resources towards extinction.
A parliamentary inquiry has spent 18 months on all aspects of the industry and will recommend what are expected to be sweeping reforms next month.
In a written submission, WA Police identified the growing market for illegally harvested timber as a major concern.
Acting Assistant Commissioner Murray Smalpage said criminals were attracted to sandalwood because the penalties for illegal harvesting were small but the profits big.
"We predict an increased involvement of organised crime unless regulation is significantly tightened," he said.
Sandalwood grows wild in WA's Goldfields and sells for up to $15,000 a tonne on international markets where its fragrant oil is highly prized.
The extent of the illegal harvest is not known but recent seizures by police and wildlife officers were valued at millions.
But the penalty under the 1929 Sandalwood Act is just $200.
The inquiry also examined concerns about the management of the legal market in WA.
At public hearings, it heard claims of cartel-like arrangements and monopolies that allegedly favoured a small number of private interests.
The Forest Products Commissions is responsible for regulating sandalwood supplies, with only 3000 tonnes a year allowed to be harvested from crown lands.
Most is sold overseas, with only about 500 tonnes available to local oil producers. Nearly all of that is sold to one company - Albany-based Mount Romance Australia, which has held contracts since 1996 to buy wood at a fixed price of $10,000 a tonne.
The inquiry has examined that deal, noting in an interim report last year that the price appeared to be below market prices.
Kalgoorlie MP Wendy Duncan said she hoped for strong findings to ensure the industry's long-term future.