It was also alleged she once refunded a buyer who was unhappy with their purchase. Mrs Malcolm was never arrested and denied allegations when interviewed by police.
She shook her head and loudly tutted as she heard the evidence being presented in court.
Vivienne Sedgley, representing the council, said: “Mrs Malcolm has at least a level of awareness of what is going on.”
The court was told that police had executed three warrants at the property since 2016, which led to the recovery of drugs, knives and large sums of cash.
The warrants also led to a number of arrests and the conviction of Mrs Malcolm’s grandson, Andre Alexis, for possession with intent to supply.
Mrs Malcolm was present on two of the occasions, but wasn’t arrested.
Her solicitor, Nigel Hallchurch, said there was “nothing to suggest she had anything to do with what went on”.
He added: “She has mainly been the victim. The evidence that Mrs Malcolm herself has been involved in drug dealing or disturbances is negligible.”