Warrnambool's Bailey Anwyl, 21, and Port Fairy cray fisherman Kenneth Schwarzenberg, 48, appeared in Warrnambool Magistrates Court charged with drug trafficking and other offences.

The pair was arrested on Friday during police raids in Port Fairy and across Warrnambool.

On Monday Mr Anwyl did not apply for bail and was remanded in custody until October 18 for a mention hearing.

Mr Schwarzenberg made an unsuccessful bail application and was remanded in custody until the same date.

First Constable Jade Moloney, of the Warrnambool police divisional tasking unit, said police established Operation Stein in April this year in order to investigate the alleged trafficking of drugs in the south-west.

He said the two accused were targeted in the operation, which involved the deployment of covert police operatives.

On April 24, the operatives attended a wholesale fish warehouse in Port Fairy's Awabi Court and met with Mr Schwarzenberg, who allegedly sold them a gram of cocaine for $350.

First Constable Moloney said the operatives were deployed again on May 16 after communicating with Mr Schwarzenberg via text messages about the sale of 100 ecstasy tablets.

He said the officers attended the warehouse about 4pm, they met Mr Anwyl for the first time and allegedly purchased 100 ecstasy tablets shaped like an Ace of Spades for $2000.

Mr Anwyl allegedly told the officers that the pills were pressed tablets from Melbourne, that he could "get heaps" and his friend said they were "sweet".

First Constable Moloney said a forensic analysis conducted on May 18 revealed the purity of the MDMA ranged between 14 and 16 per cent.

He said the operatives were deployed again on September 18, meeting the accused men at the warehouse about 4.30pm and allegedly purchasing a gram of rock MDMA for $200 and two ounces of interstate-sourced cannabis for $560.

Later that evening, the officers met Mr Anwyl in his vehicle, which was parked at Warrnambool's Raglan Parade McDonald's restaurant, and purchased a further 10 ecstasy tablets for $350, the court heard.

Investigators executed search warrants in Port Fairy and Warrnambool just after 10am last Friday, seizing various quantities of cocaine, ecstasy and cannabis.

The court heard an analysis of Mr Anwyl's phone uncovered evidence of drug trafficking, including text messages and photographs of large amounts of cash, cannabis, and MDMA pills and powder.

A search of Mr Schwarzenberg's Princes Highway home allegedly uncovered 0.38 grams of cocaine, two vials of testosterone, eight small tablets of testosterone and 3.5 Viagra tablets.

First Constable Moloney said the men were charged with trafficking multiple drugs of dependence while breaching coronavirus restrictions to purchase large amount of drugs.

He said Mr Anwyl had a 14-gram-a-day cannabis habit and was travelling to current lockdown areas, including Ballarat, to purchase drugs, while also using work vehicles to cross the border into South Australia to buy cannabis.

The court heard some of the drugs were purchased online.

Denis Connell, representing Mr Schwarzenberg, said the offences were "hotly contested".

He said the man wasn't a drug user and the police enticed him into selling drugs after approaching him at a hotel.

But magistrate Peter Mellas said the strength of the police case was reasonably strong, that Mr Schwarzenberg had failed to show compelling reasons why he should be released from custody, and refused bail.

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