This is often (but not always!) done at events where either the organizers, or the permitting government, suspects that people may use drugs and want to "discourage" such behavior.
TBH that just makes it more of a human rights violation.
I went to a club in NYC 20-ish years ago and they were selling bottled water for $6 a bottle (in 2001!) The bathrooms only had hot water so no one could refill. It was also quite hot in the main room. Scumbags.
You are on the right track but it is more malicious than that.
The drug deals done in dance clubs is generally the clubs own product being sold. In every jurisdiction in the US essentially, establishments that serve alcohol are by law required to serve free water. If some suckers spend the $6 on water, cool, but otherwise, those water bottles are the best way to hide drug profits.
Ever wonder why DJs are spraying the crowd down with bottled water from the bar and it isn't just part of the clubs set design? They gotta get rid of the inventory.
How does not selling watter discourages drug use? Like, i get that some drugs can or must be diluted in watter, but I know you can get high on most things without it. What was their logic? Drugs bad :c Heatstroke yay c:!??