In GF, when Vito agreed to provide "political protection" for the drugs business, it meant that the Corleones were in the drugs business. Period. Because, without their political protection, the drugs business would never have prospered.

In GFII, it's pretty clear that Frank Pentangeli, as the underboss who runs the NY branch of the Corleones for Michael, is in the drugs business to some extent. Though he bitches about the Rosatos that "...an' everything with them is a babania...an' they leave the gambling for last," I think he's complaining about the emphasis they put on drugs and their neglect of the gambling business. He's not complaining that they deal drugs at all.
So, we can conclude that Michael at least tolerated the drugs business, and certainly supported it through his political protection and his street operations (via Frankie).

This is a correct reflection of the real-life Mafia's attitude toward drugs. While many Dons "officially condemned" drug trafficking, as a practical matter they never questioned where the money came from that was kicked upstairs to them. Their "official condemnation" of drugs was really a test--a kind of Darwinian "survival of the fittest"--for their men. Their attitude (like Clinton's "don't ask/don't tell" policy on gays in the military) was: "Don't get caught." It was meant to discourage the weak and unimaginative among them--people who'd get caught because of their incompetence. The really capable and daring members of their families would deal drugs, not get caught--and continue to kick money upstairs to the Don.