Police searched the property in the Carby Heights area of Keady, Co Armagh on Friday morning and also seized a large sum of cash as well as a car and a motocycle.
A 39-year-old man and a 36-year-old woman were arrested under the 1971 Misuse of Drugs Act and the Firearms (NI) Order.
Both remain in police custody being questioned.
Detective Inspector Brian Foster said: “I am delighted that this large amount of drugs and a firearm have been removed from our streets. This is another example of the PSNI’s commitment to tackling the issue of illegal drugs in our society and we are determined to continue to combat illegal drug supply and use.
“If you know anything about the illegal supply or use of drugs in your area, please contact your local police station on the non-emergency number 101.
“Or if someone would prefer to provide information without giving your details, you can contact the independent charity Crimestoppers and speak to them anonymously on 0800 555 111.”