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Undercover drug busts are more frequently run as controlled buys with officers buying drugs from suspected or known drug dealers, and having other officers watching, waiting to arrest the drug dealer after the sale. However, in some sting operations, cops pretend to be the drug dealers and sell actual drugs to users and/or other drug dealers in controlled sales. Generally, cops cannot physically force, or improperly coerce, a person to act, but cops can lie to suspects.
Officers set up controlled sales stings for a few different reasons, depending on who is being targeted. In areas where drug users are known to be looking to purchase drugs from street dealers, undercover officers will pretend to be drug dealers and arrest low level buyers. These stings are meant to make users more afraid of buying drugs on the street, hopefully curbing demand and crime in the area. Conversely, when cops are trying to arrest drug dealers, controlled sales of large quantities of drugs can help provide evidence of intent.
But Isn't This Entrapment?
Unless an officer, or other person associated with the officer, is pressuring the buyer to purchase the drugs, then entrapment is unlikely to apply. Generally, entrapment only applies when law enforcement actually entice a person to commit a crime the person ordinarily would not have committed. Providing a really good price on the drugs is likely not going to suffice as adequate enticement.
The famous "To Catch a Predator" entrapment case explained the intent to commit a crime is critical if a crime hasn't been committed. However, in a controlled sale scenario, the buyer is committing a crime when they buy and then possess the drugs, and it can be a particularly serious crime if the amount of drugs purchased qualify under the laws that automatically class certain quantities as meant for distribution.
While it may seem unfair to charge an individual drug user with possession of drugs if those drugs were purchased from an undercover officer, some law enforcement departments do this with regularity, and will even manufacture real drugs to sell.
Lastly, it should be noted that if a drug buyer asks, an undercover cop is under no obligation to admit to being a cop.