In a large saucepan, bring the water and sugar to a boil over high heat. Add the tea bags, cinnamon, star anise, cloves, cardamom pods, peppercorns, allspice and ginger. Reduce the heat to medium low and simmer for 20-25 minutes. Pour the mixture through a fine mesh strainer into a large bowl and discard the spices. Stir in the honey and vanilla extract.

Let the chai concentrate cool to room temperature before transferring to a jar and storing in the refrigerator.

Combine 1 part chai concentrate and 1 part milk. Heat the mixture or serve with ice.