Colin Davies opened the cafe in September
The raid was carried out just before 1300 GMT on Tuesday at the "Dutch Experience Cafe" which opened in Stockport in September.
The cafe was full of customers when officers arrived to execute a search warrant while a BBC film crew was at the scene recording interviews.
A large quantity of cash and what police believe is cannabis was recovered.
'Unwise assumption'
Superintendent Richard Crawshaw from Greater Manchester Police said: "It would be unwise for anyone to make the assumption that flagrant defiance of the law has or ever will be tolerated."
A police statement read: "Officers of the Stockport division executed a warrant issued by Stockport Magistrates under the Misuse of Drugs Act at the Dutch Experience Cafe on Cooper Street, Stockport."
"A total of 12 people were arrested, 11 men and one woman."
Three people were arrested on suspicion of being involved in the management of premises being used contrary to the Misuse of Drugs Act.
Veteran campaigner
One was also arrested for possession with intent to supply a controlled drug, and nine were arrested for possessing a controlled drug.
It is understood that the veteran cannabis campaigner Colin Davies was among those arrested.
It is the second time there has been a police raid at the premises which Mr Davies helps to run.
Last time he was bailed pending further investigations.
He has previously called for the legalisation of the drug for medicinal purposes and he founded the Medical Marijuana Co-operative to sell cannabis for pain relief.
He has also said he was forced to use the drug out of medical necessity and supplied it to two sufferers of multiple sclerosis for the same reason.
Mr Davies attracted media attention when he handed a cannabis plant posy to the Queen during her trip to Manchester with the Duke of Edinburgh in October last year.