John David Simpson, 46, of Ballarat pleaded guilty to three counts of trafficking heroin and one charge each of possessing heroin and dealing with the proceeds of crime.

However, Magistrate Kay Robertson said trafficking heroin was a "particularly pernicious offence".

"If we didn't have traffickers, we wouldn't have users and we wouldn't have wrecked lives," Ms Robertson said.

Senior Constable Kerry Bourke said Simpson was seen in front of the Howitt St shopping centre on March 6 this year about 6pm. He passed an unknown quantity of heroin to a woman, and received an unknown sum of money.

He then drove slowly past a hotel, where he was observed by an unmarked police car. He stopped outside a house, where he gave a man another foil of heroin.

Sen Const Bourke said Simpson was intercepted by police in Peel St, where 5g of heroin were found in a sunglasses cover on the driver's seat floor and in a heart-shaped tin.

Simpson was also carrying $1965 in cash in his wallet, suspected to be the proceeds of selling the heroin.

Defence counsel Erin Ramsay said, after being arrested, Simpson went straight to his doctor and had been on the methadone program for the past six months. "He has been abstinent since his arrest," Ms Ramsay said.

She said Simpson had been a sporadic heroin user since he was 30 which had caused his relationship to falter.

Simpson was sentenced to four months' jail, to be served via an intensive corrections order.