According to the Belfast Telegraph, the cannabis was first found when police stopped a van in the town on Wednesday afternoon.
One man is now being detained under section four of the Criminal Justice Act at the Dundalk police station, the Dundalk Democrat reports.
The cannabis resin is thought to have a street value of €1.44 million ($1.82 million), reports the Irish Examiner.
Last month Irish police raided what was thought to be one of the the biggest cannabis factories ever discovered in Ireland. In that bust, authorities found cannabis with a similar street value of around €1.5 million, the Irish Examiner reported.