According to police, Golunov was carrying four grams of mephedrone, a synthetic stimulant drug, while five grams of cocaine were found during a search of his rented apartment.
Shortly after his arrest, police published photographs that they said showed a drug lab at his rented flat.
On Tuesday, authorities seemed to yield to the criticism.
But Interior Minister Vladimir Kolokoltsev surprised the nation when he announced that all charges against Golunov were dropped after police found "no proof of his part in a crime".
Russian authorities faced unprecedented pushback on Monday against the arrest of an investigative reporter on drugs charges, with independent as well as pro-Kremlin figures urging his release.
The journalist denied the allegations and said the evidence was planted by the police in retaliation for his investigative journalism about local authorities.The case triggered widespread outrage in Russian Federation, with leading media outlets and public figures demanding a swift probe into suspected police corruption.
The officers who arrested Golunov last week have been suspended pending an investigation, Kolokoltsev said.
It was a remarkable retreat for Russian law enforcement in the face of popular pressure.
Four people arrested after bombs set off near police in Hong Kong
The protesters used metal barricades as clubs and threw bottles at the police, who fought back with batons and pepper spray. China has been exerting its influence, reaching across the border to abduct dissidents taking refuge in Hong Kong.
"We are happy that the authorities listened to society", the editorial team of Meduza and several other prominent journalists said in a statement.
"We all know that this happened thanks to the effort of hundreds and thousands of people. Huge gratitude to all of them", he told the Interfax news agency. "We all together have done the unbelievable: stopped the criminal prosecution of an innocent person".
Three leading Russian newspapers - RBC, Kommersant and Vedomosti - were issued with identical front pages on Monday to express their support for Golunov.
"We should not stand down, even if Ivan is free".
There is little question that the arrest of Golunov was politically motivated and constitutes an assault on free speech and other basic democratic rights.
A march in support of Golunov was scheduled for Wednesday in downtown Moscow, and a petition demanding his release gathered some 180,000 signatures.
Golunov's case presents a major headache for Putin who has in recent months been struggling with low approval ratings amid economic trouble and rising poverty. Freeland said the event will bring up "specific cases" around the world where the lives of journalists are at risk but wouldn't go into details.
President Vladimir Putin's press secretary on Monday set the tone, saying that "mistakes" are sometimes made-an admission nearly never heard from top Russian officials. "Even the most optimistic didn't believe this would happen, and happen so quickly".
The case sparked outrage in Russian Federation and overseas over what critics slammed as the impunity and corruption of law enforcement agencies. One of the more famous cases involved Anna Politkovskaya, renowned for her critical coverage of the Russian military's invasion and occupation of Chechnya.