Alaa M. Khalifah, 35, of Lindenhurst, (inset) was arrested following several undercover drug transactions out of his store, Peoples Market, located at 901 8th Street in Waukegan, last month where investigators found drugs and a gun. | Background Photo: Google Street View; Inset: Provided

The owner of a neighborhood grocery store in Waukegan has been arrested after prosecutors say he was selling drugs out of his store while possessing a loaded gun.

The Waukegan Police Department executed a search warrant at Peoples Market, 901 8th Street in Waukegan, in the afternoon on February 26.

Alaa M. Khalifah, 35, of Lindenhurst, leases the building from another person to run the grocery store, according to Lake County Assistant State’s Attorney Mary Vukovich.

Officers took Khalifah into custody upon entering the store and a canine unit was also assisting during the warrant while officers searched the business.

Officers recovered items from inside the store, including underneath the register in storage shelves, in a backroom and in Khalifah’s car.

Investigators located 12.7 grams of cocaine, almost 500 grams of cannabis and 28.5 grams of cannabis gummies, Vukovich said.

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Officers also located a 9mm Taurus handgun that had live rounds in the magazine.

Vukovich said the firearm was located underneath the cash register where the cannabis and some of the cocaine were also located.

Officers also located a digital scale near the drugs, dispensary cannabis bags, glass jars with different types of cannabis labeled on them and approximately 100 empty ziplock-style baggies.

A significant amount of cash, some of it was in singles rubber-banded together, Vukovich said. The canine indicated for drugs on two cash register tills.

The search warrant was the result of three controlled drug buys that the Waukegan Police Department conducted with Khalifah inside his store earlier in the month.

The controlled buys occurred while the store was open for business and customers were coming in and out while purchasing items, Vukovich said.

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A $20 bill was in a satchel-like bag that officers found during the search and it was the same exact bill used in one of the prior drug transactions.

Khalifah was charged with armed violence, manufacturing or delivering cocaine, possession of 2,000-5,000 grams of cannabis, enhanced possession of cannabis over 100 grams and possession of a controlled substance.

The Lake County State’s Attorney’s Office filed a petition to detain Khalifah pending trial, arguing he poses a real and present threat to the safety of the community.

“The defendant was also selling drugs, while in possession of a loaded firearm, out of an open neighborhood grocery store when customers were coming in and out. The defendant poses a clear and present threat to the safety of the community given his drug dealing,” Vukovich said.

Attorney Jason Dreifuss, who is representing Khalifah, argued his client does not pose a safety threat and sought his release on pre-trial conditions. “My client is terrified. He will comply with whatever conditions this court imposes.”

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Dreifuss said Khalifah, like many business owners, has a gun on the premises and that it would be “foolish” to have an unloaded gun. He said his client is licensed to own the gun.

Lake County Judge Michael Nerheim granted the state’s petition and remanded Khalifah to the Lake County Jail.

Khalifah is scheduled to appear in court again on March 19 for a preliminary hearing.