Green’s Dictionary of Slang

cap v.6

[cap n.4 (1)]
(drugs)

1. [1940s+] (also cap up) to transfer bulk drugs (in powder form) into capsules for sale.

2. [1950s–60s] to be given drugs for free.

In phrases

cap someone’s arm up (v.) [joc. var. of sense 1 above]

[1960s] (US drugs) to inject a narcotic.