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Two men were arrested in Peabody after police caught them running an alleged drug distribution system out of a home where children lived, Peabody police said.

Gary W. Cioffi, 36, of Peabody, and Marco A. Sosa, 28, of Salem, were arrested at 9 John Road in Peabody Oct. 11 around 5 p.m., Peabody Police Captain Dennis Bonaiuto said.

Police started investigating when neighbors reported in late August that they noticed an odor of marijuana and a lot of cars going to the home, Bonaiuto said.

“Detectives saw what they believed to be suspicious activities and, as a result, they ended up stopping a motor vehicle in the vicinity of that area. They subsequently found over three-and-a-half pounds of marijuana in the motor vehicle and they ended up arresting the driver of the motor vehicle,” Bonaiuto said.

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Police arrested Sosa, the driver of the car, Bonaiuto said. A woman and a 13-month-old child were also in the car. Police then searched Cioffi’s home and arrested him.

“The detectives subsequently executed a search warrant at 9 John Road in Peabody. Upon entering the residence there, they observed evidence of what appeared to be a very high-level drug distribution system,” Bonaiuto said.

Two children lived at the home, police said.

Police found mushrooms, marijuana, viagra, THC, oxycodone, and vaping cartridges throughout the home, Bonaiuto said. The products were worth several hundred thousand dollars.

Cioffi and Sosa were set to be arraigned Monday in Peabody District Court, police said.

Cioffi was charged with trafficking at least 100 pounds but less than 2,000 pounds of marijuana, possession with intent to distribute a Class B drug, possession with intent to distribute a Class E drug, child endangerment, and two counts of possession with intent to distribute a Class C drug. Sosa was charged with child endangerment and possession with intent to distribute a Class D drug.

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Alyssa Lukpat can be reached at alyssa.lukpat@globe.com. Follow her on Twitter @AlyssaLukpat.