Police have set sniffer dogs on the NSW hippie town of Nimbin, finding two kilograms of cannabis in two businesses that were allegedly selling drugs, including LSD and MDMA.

Cannabis supply around Nimbin has been the focus of a police operation since March, and today more than 70 local and specialist officers swooped.

A cafe and a bookshop were raided and 2kg of cannabis was found.

"It's alleged these people have been involved in the ongoing supply of drugs including cannabis, LSD, MDMA and prescription medication," Superintendent Greg Martin said.

"As a result of this operation, we have dismantled a criminal group we allege was responsible for supplying significant amounts of drugs throughout the Nimbin area."

A large cache of mature cannabis plants was also discovered at nearby Jiggi.

Eight people have been arrested and police say they expect to charge more people.

"The operation remains ongoing, with a simultaneous drug dog operation targeting the entire township," Supt Martin said.

Those convicted of drug supply face a maximum of 25 years in jail.