Shan State is a state located in Myanmar (Burma), which takes its name from the Shan people, the majority ethnic group in the Shan State. Shan State is comprised of 54 townships. Its capital is Taunggyi. The state is largely rural. Major cities of Shan State are Lashio, Kyaing Tong and Taunggyi.

Shan State borders China to the north, Laos to the east, and Thailand to the south. It also shares borders with five administrative divisions of Myanmar. Most of the Shan State is a hilly plateau; there are higher mountains in the north and south. The gorge of the Thanlwin River cuts across the state

With a standing army of 25,000 to 30,000 soldiers, the United Wa State Army (UWSA) is one of the largest non-state armed groups in the world and the largest in Myanmar. It operates from a reclusive virtually autonomous area, called Special Region 2, that it controls along the border of China, as well as a semi-contiguous region along the Thai border in Southern Shan State.

The narcotics trade has long been the focal point of the political economy in Northeastern Myanmar, where, until 2005, there were high levels of opium cultivation in Wa Special Region 2. Myanmar is still the world’s second largest producer of opium—from which heroin is derived—after Afghanistan, though there has been a steady decline in opium cultivation in Myanmar’s conflict-torn border regions in recent years.

Trafficking of methamphetamine from Myanmar to the rest of Southeast Asia has soared since the UWSA’s eradication program started, yet Wa leaders adamantly deny involvement in the drug trade. It’s difficult to prove who’s profiting off the illicit narcotics; international access to Special Region 2 is controlled by the UWSA or restricted by the Myanmar government.