THIS is the Sydney great-grandmother police allege is a drug dealer.

But Noelene Edwards insists she's just a grieving widow, struggling with the recent loss of her husband.

The 74-year-old Surry Hills woman said she had been on her way into the city to pay for her husband's funeral on Tuesday when a police sniffer dog allegedly detected she was carrying cannabis.

Police allege a search of Mrs Edwards' handbag revealed 40 resealable bags, each containing an amount of the illegal drug.

She was taken to a nearby police station, before a dozen officers searched her house and allegedly discovered more resealable bags of various sizes, and another small amount of the same drug.

Mrs Edwards, a grand-mother of seven and great-grandmother of six, was charged with possession and supply of prohibited drugs. She was granted bail and will face court next month.

But Mrs Edwards said yesterday she had no idea how the drugs allegedly ended up in her handbag.

"I was walking along George St in the city and I saw the dog but I just stepped aside so I didn't trip over it," Mrs Edwards said.

"Next thing I am being surrounded by all these police and then they put me in the back of a police wagon."

Each time she leaves her home to go do her grocery shopping or some chores, Mrs Edwards said she takes "whichever bag I can find".

"I always make sure I have my bus fare in one pocket, and my wallet in the other. And then I grab a handbag from the pile over there so I have something to put my shopping in," she said.

When police arrested Mrs Edwards on George St she was on her way into the city to make the last payment for her husband of 35 years' funeral.

"Reginald died five weeks ago, and I'm just so lonely without him," she said.

"We buried his ashes in the garden last weekend, that's all that has been on my mind."

Police said they were conducting a drug operation around Central Railway Station when the sniffer dog allegedly detected a positive reading from the old woman.

"It shows that the drug detection dogs don't discriminate on what people look like, or how old they are," Inspector Mark Christie said.

For more on the Sydney great-grandmother who police allege is a drug dealer go to The Daily Telegraph.