Joshua Kemper, 21, pleaded guilty to a single count of drug supply in Wollongong Local Court on Tuesday after being caught red-handed by eagle-eyed police.

Documents tendered to the court said officers attached to Strike Force Raptor were carrying out proactive patrols around Hotel Illawarra on May 9 this year when they noticed Kemper standing in nearby Richardson Lane speaking with a group of three men, one of whom was seen to be urinating.

Police approached the group, introduced themselves and asked them what they were doing in the laneway. The court heard each of the men had differing versions as to where they had been and where they were going: Kemper claimed they were all mates, but the three men told police they didn't know Kemper.

Police said Kemper appeared nervous while speaking with them, noting his hands were visibly shaking and he continued to avoid their eye contact.

They carried out a search, finding four resealable bags in Kemper's pocket, each containing 10 capsules of brown granules, believed to be MDMA, or ecstasy. They also located $450 in cash.

Kemper admitted he'd collected 50 capsules earlier that afternoon from an unnamed associate. He said he had planned on taking four or five caps himself and selling the rest for between $10 and $20 over the next week.

Kemper confirmed he'd been doing this on weekly basis for the past month.

In court on Tuesday, defence lawyer Graeme Morrison said his client no longer used illicit drugs and was turning his life around.

"He's gone back to TAFE to study his love, which is spray painting," he said.

However, police prosecutor Sergeant David Weaver said strong action needed to be taken against Kemper in light of recent drug overdose deaths at music festivals.

"The drug has been linked to the deaths of several young people ... in the current climate the court should take note of the community's concerns," he said.

"They are fed up with young people taking and being supplied with this drug."

Magistrate Susan McGowan sentenced Kemper to a community-based intensive corrections order, which includes 200 hours of unpaid work.