Baxter was suspended by the club in May after he failed an out-of-competition test, but denied any wrongdoing.
The 23-year-old was found guilty at a Football Association personal hearing.
However the remaining three months of the ban have been suspended for two years so he is available for the Blades' first league game on 8 August.
BBC Radio Sheffield reports that at the hearing last week, Baxter denied any intentional wrongdoing, adding the traces of ecstasy found in his system were as a result of his drink being spiked.
Baxter, who was signed from Oldham started his career at Everton. He is an eciting talent in many eyes with a bright future.