Repost from old forums...
A khajiit is dealing in black market skooma and moon sugar. He approaches you as a potential buyer. You can turn him into the guards at this point for a small reward, or keep dealing with him. If you keep dealing with him, he tells you about some local Camonna Tong who use khajiit and other slaves to smuggle around moon sugar in their stomachs (a'la that one Hla Oad/Balmora quest), and he asks you to put a stop to a local instance of this for sake of his kinsmen.
As a sort-of reward: this khajiit is also a merchant that will take skooma and moon sugar off of you, with 2000 gold as his top price.
The reward for turning the khajiit in nets you a small bounty from the guard. (And you lose access to the merchant as he disappears, of course).
The reward for helping out the khajiit nets you some moon sugar.