I actually fixed the bug last night, but since I couldn’t find a solution on google, I thought I’d answer it on Stackoverflow for people who will run into the same problem in the future.
Contact Form 7 was not sending out emails and throwing a red error box. Mandrill was working properly, so it had to be my wordpress configurations.
I solved the problem by installing an SMTP plugin (I decided to use easy wp smtp). All you have to do is put in your Mandrill SMTP values and it should start working!