So I got a demand from a vendor that I send $150 to his bitcoin address or he would "release information about my drug activities to the feds." He included a copy of my unencrypted address.
I don't pay, right? Do I ignore, clean house, and hope it goes away? Even with a clean house I would really not like the police poking around since I have roommates and stuff.
Ignore it and clean house. Blackmail is a far more serious crime than simple drug use and minor personal possession. If you're feeling frisky and want to play, tell him all communications between the two of you are being forwarded as unredacted screenshots to the FBI internet crimes division and what he's doing will be handled much more harshly than anything they would ever do to you for buying a little personal stash online every once in a while. Feel free to play hardball here, he's just trying to scare you into sending him a few extra bucks. Why not return the favor and make him shit his pants?