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Officers entered a flat on Cypress Court to discover three men inside the property preparing bags of the class A drug.
All three men, aged 17, 18 and 61, were arrested on suspicion of possession with intent to supply and transported to custody for questioning. The 18-year-old has also been arrested on suspicion of arson.
The seizure of the crack cocaine is estimated to be valued at approximately £3,500.
It comes following arrest attempts by officers in connection with an arson at a property on Brierville Road in Stockton on Monday 3 February.
A group of men were reported to have turned up at the house and caused damage to the window before setting a curtain alight. There were no reports of anyone being injured.
Enquiries have been ongoing since the arson resulting in the arrests of three men.
Inspector Andrew Vickers, from Stockton’s neighbourhood policing team, said: “Since the report was made, officers have been persistently conducting patrols to apprehend the individuals suspected of being involved.
“As part of this, it has led us to a property and not only a large quantity of crack cocaine being seized but people inside the property in the process of preparing it for onward sale.
“This is great news for our community. We have removed these drugs from the streets and strengthened our grip on targeting serious and organised crime.”
An order that allows officers to stop and search individuals is currently in place in the Newtown area of Stockton until the early hours of Friday 7 February. This is to help prevent anti-social behaviour and serious violence. You can find more information here.
Anyone with information, CCTV or dash cam footage that could assist the investigation is asked to contact Cleveland Police on 101 quoting reference number 020093 or visit the website.
Information can also be provided anonymously by calling Crimestoppers on 0800 555 111.