What kind of legal trouble do landlords face from tenants who deal drugs on the property?

Drug-dealing tenants can cause landlords all kinds of practical and legal problems:

Anyone who is injured or annoyed by drug dealers — be it other tenants or people in the neighborhood — may sue the landlord on the grounds that the property is a public nuisance that seriously threatens public safety or morals.

• Local, state, or federal authorities may levy stiff fines against the landlord for allowing illegal activity to continue.
• Law enforcement authorities may seek criminal penalties against the landlord for knowingly allowing drug dealing on the rental property.
• In extreme cases, the presence of drug dealers may result in the government confiscating the rental property.
• A drug dealing environment can make it difficult to find and keep good tenants, and the value of the rental property will plummet.

Source: nolo