London’s Brick Lane has been home to many waves of settlers. In the past 300 years, French, Jewish and Irish immigrants have all called it home, its narrow thoroughfare crammed with a carousel of temples and stalls selling native cuisines. In the 1970s, a large Bangladeshi community established itself and transformed the road into London’s curry capital. In the 90s, fashion students and wannabe YBAs took over the northern end of the street, turning its former brewery buildings into vintage clothes emporiums and bars.

Last year, a new group arrived on the street. In the long tradition of Brick Lane they are street vendors hawking their wares, loudly trumpeting their best deals. But they share no cultural heritage and sell only one product: balloons full of nitrous oxide.

When I arrive at Brick Lane around 11pm on a Saturday night, there are more than 20 sellers lining the 100m stretch of road between the curry houses and bagel shops. They have colonised the street to such an extent that if you close your eyes, all you can hear is the woosh of pressurised gas inflating balloons, the jangle of thousands of discarded chrome canisters being kicked across road and the cries of “three for a fiver” from these nitrous candymen. At every turn, there are people huffing on brightly coloured balloons filled with gas. They look like disreputable children’s party entertainers, blowing in and out of balloons till they slump on the floor and start giggling manically.

Competition between sellers is fierce. One man has a boombox playing speed garage strapped to his waist to attract custom. Two girls dressed in matching purple boob tubes and red bodycon skirts tell me his wares are a pound cheaper than everyone else’s. This is a battle of the brands as much as anything: some wear branded T-shirts; one of the more flash dispensaries has its company name printed on the balloons. With so much competition you would think it would be difficult to make sales, but according to one seller: “People come here cos they know they can get it. Brick Lane and Shoreditch have become the capital for laughing gas. Doesn’t matter how many people start selling, people are always going to want it.”

The statistics confirm that the laughing gas market is growing, and it goes far beyond this corner of east London. New Home Office figures suggest 470,000 people aged 16-59 used nitrous oxide in the past year, up 100,000 from 2013. It’s particularly popular with young people: 7.6% of those aged 16-24 used nitrous oxide in the past year, a greater proportion than had used cocaine (4.2%), ecstasy (3.9%) or ketamine (1.8%).

It feels a bit weird to be talking to people as they come round from their giddy highs, so, when one group suggest I enjoy a balloon with them, I decide to get involved.

I exhale as much as I can, then inhale a full balloon as if it was helium. That bit on its own doesn’t really do anything but – as I breath back into the balloon, in and out, essentially asphyxiating myself until I can’t breathe any more – I start to feel the effects. The balloon flies out of my mouth and the most noticeable thing is the way that sound changes, as if everything is circling around me in a fast car. Even though I’m completely conscious, I feel a little disconnected from reality, like the world is gently coming into focus. After 10 seconds, things mostly return to normal, but I can feel myself grinning and, while I’m certainly not in stitches, I find myself chuckling with around the same force as if someone had made a funny quip on Would I Lie To You? After 30 seconds, the effects have worn off completely.

That’s how a single balloon, taken sober, feels. Many users who take double or triple balloons (where more than one canister is dispensed into a single balloon), or take them on a night out in combination with other drugs, report total and deep hallucinations lasting up to a minute. One user tells me: “I’ve hallucinated entirely fictional conversations with the people around me. When I come round I carry on talking and everyone else is like, ‘You what?’”

The use of recreational nitrous oxide dates back hundreds of years, with the term “laughing gas” originating from laughing gas parties, where medical students would get high on their own supply, dating back to the end of the 18th century. Coleridge was a fan, saying it gave him a “pleasurable sensation of warmth”. Using balloons goes back at least to the early 70s. One American medical journal, published in 1972, remarks: “At a recent rock festival, nitrous oxide was widely sold for 25 cents a balloon. Contact was made with a ‘mystical-religious’ group that used the gas to accelerate arriving at their transcendental-meditative state of choice.” It increased in popularity with the rise of festival culture – it’s been a mainstay of Glastonbury’s stone circle and squat parties in Bristol and south London for at least a decade – but the equipment needed to dispense it remained relatively expensive. With online stores now flogging cheap canisters and dispensers, it’s become more accessible, even hitting the celebrity crowd at the end of the 2000s, with the likes of Mutya of the Sugababes and Prince Harry caught on the NOS. In 2012, Demi Moore reportedly went on a nitrous oxide binge after splitting from her husband Ashton Kutcher.

Nitrous oxide canisters. Photograph: Alamy Photograph: Alamy

The principal reason for its popularity is that, in the UK at least, possessing and inhaling nitrous oxide remains legal. It is effectively legal to sell, too, though that issue is more complex. If it is sold as a medical product it is restricted under the Human Medicines Regulations Act (HMRA) of 2012. However, if it is sold for catering purposes (kitchens need the capsules to create whipped cream) it’s not covered under this legislation.

Before online retail, nitrous users really did have to go to John Lewis and buy expensive pieces of kitchen equipment to take to festivals. Now, of course, anyone can set up a website claiming they are a kitchen supply shop, even if they only seem to be selling one product.

Some organisations and councils claim that if you are clearly selling nitrous for recreational use – say, on the street in the middle of the night with 100 balloons in your bag – then you fall foul of the HMRA even if you bought the gas from a catering company. But the Medicines and Healthcare Products Regulatory Agency itself released a statement last year saying nitrous bought from the catering industry does not fall under its regulation, however it is then used.

While the legal debate is muddy at best, the reality is that few police officers feel there is enough legal grounding to prosecute under these laws. Most dealers we spoke to told similar stories: that the police might search them, but are powerless to arrest. One dealer says a friend was stopped while carrying a bag with balloons, a box of chargers and a cracker (dispenser). “They arrested him, searched him to see if had any illegal drugs on him, which he didn’t, then they gave it all back to him. That was about a week ago. So it’s not illegal; there’s nothing they can do.”

Despite the lack of legal protection, last week the sternest warnings yet came from the Local Government Association, an organisation that represents 400 councils in England and Wales. It said it was “deeply disturbing” that people view nitrous oxide as a safe high, and more must be done to raise awareness of the harmful effects.

Earlier this year, Hackney council in east London confiscated more than 1,200 canisters on one Saturday night. Unable to get help from drug laws, they used unauthorised street-trading regulations to make seizures. The Metropolitan Police says it intends to use trading standards legislation to tackle the problem.

But street dealing is just one part of the laughing gas business. I manage to track down one of Britain’s biggest laughing gas dealers, with businesses in London, Ibiza and Croatia. When he first picks up the phone, he tries to fob me off.

“I’m not in the balloon scene. I’m in the catering scene now. I’m in the commodity trade scene.”

But on promise of anonymity, he loosens up and explains what he means by “commodity trade scene”.

Clubbers breathing in laughing gas in a nightclub in Bristol. Photograph: Alamy Photograph: Alamy

“Look that’s just a language we use,” he says. “If someone rings me and says: ‘Can you sell me some balloons?’, I’d say: ‘I don’t sell balloons, I sell cream chargers. Catering supplies.’ If they say: ‘How do you breathe it in?’ I wouldn’t sell it to them, because that’s misuse and I don’t want that coming back on me.” Sometimes he makes his clients sign a disclaimer saying they won’t use their industrial quantities of nitrous oxide recreationally.

He says the money that people like him are making from selling balloons is “ridiculous” and, perhaps surprisingly, he is fully registered for tax. He says that wholesalers often won’t bother with dealers who aren’t, sometimes reporting them to the tax office themselves, so they can keep the business above board. Although anyone can buy laughing gas on the internet, this dealer provides delivery in 24 hours. While I am on the phone to him he continually breaks off to take orders on his other phone. Is he concerned about the popularity of the drug? “I don’t even see it as a drug,” he says. “People are not beating each other up. There are no turf wars. Crime is not being committed to fund this, do you know what I mean? People are not robbing grannies to go buy balloons. People fuck their lives up with coke; people lose their brain to MDMA; ketamine makes people disappear. This isn’t that. People don’t batter balloons the way they batter drugs. You do one or two then crack on with your day.”

There have, though, been some highly publicised deaths relating to nitrous oxide. In 2012, a 17-year-old boy died after taking gulps of nitrous from a canister. In 2007, Daniel Watts, a 23-year-old company director, was found dead at his home next to a large cylinder of nitrous oxide. Overall, there were 17 deaths associated with the misuse of nitrous oxide between 2006 and 2012. These deaths have fuelled a tabloid panic, in which the drug is always referred to by its supposed nickname, “hippy crack” (not a single dealer or user I spoke to used the term), to insinuate that it is as serious as a class A drug. Earlier this month, the Sun ran a story proving how easy it was to purchase by ordering some for the office. They were shocked to find “the supplier brazenly handed over nearly 100 canisters in broad daylight as children played just yards away”.

Stephen Ream, a director of Re-Solv, a charity dedicated to preventing the abuse of glues, gasses and aerosols, says these deaths are not necessarily related to balloons of laughing gas. While it’s incredibly dangerous to try to fill a room with gas, or inhale it directly using a mask or bag, this normally involves using large, medically controlled, tanks of nitrous oxide.

“People have certainly died from laughing gas,” he says. “They can get into serious trouble using tanks and masks and they certainly shouldn’t be driving while doing it and should be careful round rivers and swimming pools,” he says. “But the second you get into saying people using nitrous in balloons is a massive issue, people will call your number on that, and they’re right. It’s a concern that it’s going up, the numbers of people using are quite stunning, but it’s not the most dangerous thing by a mile.”

This is a position supported by DrugScience (formerly the Independent Scientific Committee on Drugs) which, while pointing out the dangers surrounding frostbite from the cold temperature of canisters and potential vitamin B12 deficiency from heavy use, describes nitrous oxide as “one of the least risky drugs”.

A peer-reviewed paper by Mike Jay published in the journal Drugs and Alcohol Today found that although some users “may experience unpleasant sensations of dizziness and weakness”, inhaling nitrous oxide from balloons “eliminates the risk” of serious accident. Jay argues that the risk of banning of canisters and dispensers is greater than the risk of the balloons themselves as it would, in probability, “lead to an increase in the far more dangerous use of large tanks and surgical masks”.

So why then, are councils so keen to get nitrous oxide off our streets? Hackney councillor Feryal Demirci, who has been leading the charge, mentions the health risks only in passing. Her main concerns are the complaints of local businesses, “antisocial behaviour when people are intoxicated with the laughing gas”, and the litter caused by balloons and canisters being left on the streets. She says the council wouldn’t try to stop any sales of laughing gas that occurs within licensed venues, but points out that many nightclubs and festivals have chosen to ban the gas themselves. When I mention that many drugs experts consider the product low-risk, she says that “this isn’t medical-grade product; users don’t know what they’re getting”.

Whatever is the right answer over legality and risk, there remains something distinctly dystopian about the cheap, barely-there high that comes from huffing on a balloon. Perhaps the most uncomfortable thing about laughing gas for councils and the police is not its danger but its visibility. It’s a high that’s not measured out in fractions of a gram and hidden in a jeans pocket, but one that’s covering the streets in brightly coloured latex and chrome capsules.