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Police were called to reports of a cannabis farm at an address in Station Road, Beamish Village, at around 4pm on Monday, June 24.
Officers discovered approximately 400 plants at the site.
Two men, aged 30 and 44, have been arrested on suspicion of the cultivation of cannabis and remain in police custody.
A 23-year-old man was also arrested on suspicion of the cultivation of cannabis and has since been bailed pending further enquiries.
The farm is being dismantled and the plants will be destroyed.
A 48-hour closure notice for the premises has also been issued by police.