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Red ice was a narcotic drug, a form of heroin created from genetically manipulated poppies from Earth and Morolovov gapsum from Deneb V. It had the effect, after prolonged uses, of breaking down the hemoglobin of iron-based blood and causing fatal hemorrhaging -- the reason for the descriptor "red".
The trade of red ice was very lucrative for criminal cartels operating outside the United Federation of Planets in the 2330s. Both the Orion Syndicate and the Asfar Qatala competed for the red ice trade on worlds like Farius Prime and Ryn III. By 2334, red ice began working its way into Federation space, drawing the attention of Starfleet Intelligence. In 2335, SI sent a three-person team, including Commander Samir al-Halak, to Ryn III, supposedly to investigate red ice distribution. (ST - The Lost Era novel: Well of Souls)