1 pound honey
3 1/2 cups bottled water
3 cups white sugar
3 tablespoons caraway seeds
25 whole cloves
1 tablespoon vanilla extract
4 teaspoons ground cinnamon
2 teaspoons ground nutmeg
2 pints 190 proof grain alcohol
Peel orange and lemon in a circular motion in a large strip. Place peels in a warm, dry area to dry for 24 hours.
Stir honey, 1 cup water, sugar, caraway seeds, cloves, vanilla extract, cinnamon, and ground nutmeg together in a large pot; bring to a rolling boil, reduce heat to low, and simmer for 45 minutes. Add dried orange and lemon peels to honey mixture; continue to simmer for 15 minutes.
Remove from heat; discard fruit peels. Stir grain alcohol and remaining 2 1/2 cups water into honey mixture. Transfer mixture to a glass container and tightly cover with a lid. Place in a cool location out of direct sunlight and let set, gently swirling container every few days, for 1 week.
Strain mixture through double-layered cheesecloth to remove sediment. Pour liqueur into bottles or decanters and seal.