Different forms of vanilla are manufactured using different methods, resulting in different rulings regarding its permissibility for Muslim consumption.

Vanilla pods are steeped in a mixture of ethanol and water to produce vanilla extract, which contains at least 35% ethanol. Its impermissibility is apparent given the presence of alcohol. 

The ethanol and water can then be evaporated to produce vanilla powder, the permissibility of which will be discussed shortly.

Instead of alcohol, the pods can be steeped in glycerine/glycerol or propylene glycol to produce natural vanilla/natural vanilla flavour. 

Glycerine/glycerol is derived from animal or plant fat. If produced from animal fat, the animal needs to be halal and slaughtered according to the Sharia.

Propylene glycol is a synthetic chemical compound and is a halal solvent.

Artificial vanilla flavouring/vanilla essence/vanillin is also consumed. It is synthesised from chemicals and is halal.

There has been scholarly discussion regarding the permissibility of consuming forms of vanilla, like vanilla powder, that have been produced using alcohol but do not contain alcohol in the end product.

Arguments for this include:
1.That alcohol is metaphorically impure, not physically, thus it is pure.

However, the majority of the scholars conclude that its impurity is physical. 

2.That if the alcohol has been totally dispersed whereby no trace of its substance or its effect remains, then it is permissible to consume it. 

This, however, is only applicable when a small amount of alcohol unintentionally falls into food/drink. Thus, this is different from the intentional addition of alcohol to vanilla.

Qur’anic verses , Prophetic sayings, and Qur’anic exegeses  indicate the necessity of the avoidance of all interactions with alcohol and all other intoxicants, which would include the use of alcohol to produce vanilla.

Some say that since vinegar which has been converted from alcohol is halal given that no alcohol remains in it, substances like vanilla powder should similarly be permissible. 

There is, however, a difference between producing vinegar by leaving halal raw materials in vessels to ferment naturally without human interaction, which is permitted, and between producing vinegar by someone leaving alcohol in a vessel to oxidise into vinegar, which is impermissible according to the majority of the scholars.

Thus, it seems safer to avoid consuming vanilla which has been produced using alcohol. And Allah knows best.