Without going into too much detail even though other sites on the internet cover this (you shouldn't do this) basically a person who wants to buy drugs using cryptocurrency goes to the "Dark Web". They use a Tor browser and go to certain sites that are similar to on-line stores for illegal drugs. They can actually have on-line chats with the store's support about the products in the store.
Once the buyer of the drugs is ready to buy the customer orders and sends the cryptocurrency after filing out an order form. The order form contains the location address the customer requests the drugs to be sent to. The package of illegal drugs is then sent as any other nondescript package using the regular mail service.
Again, you shouldn't do this. This is just academic discussion answering a musing question and only meant for educational purposes.
The video link below covers a basic view of the "Silk Road" and how it successfully works:
There are millions of wallets all around the world on different exchanges, I'd like to think that all it would take is for the person selling the drugs to forward a bitcoin or altcoin Wallet address to the person that's buying the drugs, the person makes the transfer and when it's received, they're told where they can go and pick up the drugs, it's virtually untraceable, especially if you use something like Zcash or blackbytes.
The wallet address could be changed for every transaction and there'd be no way for the authorities to even track the transactions once the transfer is made of their using blackbytes or Zcash.
It's an easy way to transfer money between people without the police actually knowing who is transferring money to who, and when the money is actually being transferred. It's not like as if they can monitor every transaction on the blockchain and even if they can, there's no way of telling which transaction belongs to the drug dealers.
Cryptocurrency is a drug dealers dream come true, they can basically remain in the shadows and not reveal themselves for any reason. The drugs could be dropped off at different places and it's the person that's buying it that will have to go and pick it up. The drug dealer and the customer never ever have to meet in person.
Well, as bad as it sounds, it's actually very possible. The nature of cryptocurrency wallets make it such that once cryptos are sent, there is no way to get them back or know who you sent it to. All you have is the person's wallet address. So applying this anonymity to drug cartels and their deals, untraceable payments can be made worldwide and everybody would be non the wiser about it.
The same applies to money laundering, bribes and all other crimes that involve transfer of funds.