Seamus Duddy claimed he consumed and provided free to others for medicinal purposes, prosecutors said.
The 39-year-old was driving a van stopped at a police check point in the city just after midnight on January 21.
Crown lawyer Iryna Kennedy said various types of cannabis worth up to £1,200 were found on him and in the vehicle, along with a mobile phone, £200 and 300 £uros in cash.
She claimed initial examination of the phone revealed drug activity beginning last August and continuing until five minutes before his arrest.
“Police say he supplies both north and south of Ireland,” the barrister added.
Duddy, of Ardnamoyle Park, Shantallow, was allegedly using an app which enables messages to be deleted once they are sent.
During interviews he said he had been addicted to cannabis since the age of 11, the court heard.
The father-of-two told police that he uses the drug to ease pains in his knees and arms, as well as allegedly supplying to others in similar circumstances for free.
Opposing bail, Mrs Kennedy contended: “This applicant runs a Facebook group called the ‘LegenDerry Cannabis Club’.”
She said it had been set up to organise meetings among those who use it for medicinal reasons.
Duddy faces charges of being concerned in the supply of Class B drugs, possessing cannabis with intent to supply, and having criminal property.
Defence barrister Dean Mooney told the court his client accepted being a member of the Facebook group.
“He was not making great profit… this is not a man who in any way displays the trappings of wealth,” the barrister insisted.
“He knows there will be a day of reckoning.”
Mr Mooney suggested Duddy could be released on bail to attend an intensive counselling course in Derry.
But the judge instead adjourned the application until next month to await progress in the investigation.
Mr Justice Horner stressed: “This case should be dealt with quickly.”