He works where you live . . .
"Just had an interesting encoutner [sic] with a neighborhood drug dealer/user. "
So, you will run into one another again.
Do not make friends with him (you don't want to be connected with the drug trade), but do take advantage of any future opportunity to let him know by your actions that you are no threat to him . . . just another neighborhood resident walking the dog. But in my experience from living in a similar neighborhood, it seems to be important to somehow discretely manage that with an air of authority so he knows you are not a target, at least not an easy one. (e.g., "Good evening." [Said with friendly but watchful visage and self-certain posture, to indicate, "I know you're there, I do not feel threatened, and I'm still gonna walk this dog."]) He'll likely look past you to pick on someone else, realizing that you are not out to get him or expose him. He just might suspect that you have good reason to have no fear of him.
"Just had an interesting encoutner [sic] with a neighborhood drug dealer/user. "
So, you will run into one another again.
Do not make friends with him (you don't want to be connected with the drug trade), but do take advantage of any future opportunity to let him know by your actions that you are no threat to him . . . just another neighborhood resident walking the dog. But in my experience from living in a similar neighborhood, it seems to be important to somehow discretely manage that with an air of authority so he knows you are not a target, at least not an easy one. (e.g., "Good evening." [Said with friendly but watchful visage and self-certain posture, to indicate, "I know you're there, I do not feel threatened, and I'm still gonna walk this dog."]) He'll likely look past you to pick on someone else, realizing that you are not out to get him or expose him. He just might suspect that you have good reason to have no fear of him.