The former Celtics PF was busted back in February 2018 after cops say they found 126 grams of marijuana on him along with $92,164 in a briefcase at his Maryland hotel.

He was arrested and hit with 7 charges -- including a felony count of drug possession with intent to distribute ... which carries a maximum of FIVE YEARS in jail.

But, Davis reached an agreement with prosecutors last month to avoid time behind bars ... agreeing to pay the maximum fine of $15,000 in exchange for having the charges dropped.

Technically, the case was placed on the "Stet docket" -- which, in Maryland, means the case is essentially inactive, but not entirely erased. The case can be reopened if Davis missteps in the next 3 years. It's NOT a conviction. Davis did not have to enter a plea.

Davis' attorney, Margaret Mead, tells us it was a "reasonable resolution" to the case ... adding, "He wants to make a comeback and he's certainly not a drug dealer. He's not any of those things."

Davis played in the NBA from 2007 to 2015 -- winning a ring with the Celtics in 2008 -- and piled up 4,111 career points.