Officers arrived at the 22 year old's Port St. Lucie house on Friday morning to execute a search warrant and allegedly found him in a bedroom with a 17-year-old girl.
He was arrested for pot possession, possession of drug paraphernalia and contributing to the delinquency of a minor.
But Underwood has accused Florida officials of orchestrating the raid to stop him opening a hookah bar in the town, and is planning to sue.
He tells TMZ.com, "I jumped through hoops to get my permit (for a hookah bar)... they are still bothering me.
"They took all my hookahs... and now we have to push our opening back. I'm going to be filing a lawsuit against the town... my lawyer is already aware."
A hookah is a waterpipe used to smoke flavoured tobacco.