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Or you can take it to a tech hunter city. It's not illegal there, so no risk, and they pay a lot. The most popular hash running route is from the swamps to Flats Lagoon.
As for "why," unclear. It's not a particularly dangerous drug, no more than legal alcohol. In the UC I guess it could be seen as a form of social control, just one more excuse to throw people into the slave mines. And the shek and Okranites probably just don't think people should be allowed to have fun.
Holy Nation doesn't allow it because Okran says so and how dare you question me, heretic.
UC doesn't allow it because its cheap to produce and scarcity increases the price. They don't have any kind of moral or ethical reason. Having it be illegal means nobles get more money for selling it and they can arrest people they dont like and have more slaves.
Originally there was an object just called "Narcotics" in the game. And that was what you smuggled, presumably leaving the exact type and severity of the drug to your imagination. Eventually this object was replaced with the hash we have today. I don't know why; possibly a "softer" drug would be less likely to get the game censored in countries where they have restrictions on the depiction of drugs in video games.
Hash is made from Hemp. That is reason why. You can freely sell or transport hemp in all cities.
Unfortunately not true, hemp itself is also illegal in the UC and they won't be happy if they find you transporting or growing it.
The shek don't care about hemp and will trade it. I can't remember how HN feels about it.
Good advice! Smuggling it in isn't the problem, it's just finding a shop that will buy it is the problem. One time the travel shop in a shek town bought it, but the same shop won't buy it anymore.
Hemp is also know colloquially as 'ditch weed' because it was widely grown during the wars to make lots and lots of rope, and it just grows wild now, but smoke it and you'll just get a headache.