Bring the water and milk to a boil in a saucepot. Add the remaining ingredients, except honey turn the heat down to a simmer, cover, and steep for 10 to 15 minutes. Remove from heat and strain*. Add honey and mix well. Store in refrigerator. Can be served hot or cold.
*Note if using a glass pitcher, make sure to thoroughly warm the pitcher before adding hot chai.
Recipe courtesy of Heather Howitt; Owner of Oregon Chai