Even I know never to admit to drug use or any other illegal act when applying for entry to ANY country. Do you think you or I would be granted permission to move to Mexico if we admitted to drug use?
If it's any comfort to the OP, I'm pretty sure that his daughter and SIL are lying to him. I'm willing to bet the SIL got jammed up on something a lot more serious than what was claimed. Who would tell their father "oops daddy, the feds found out about my hubby's trafficking record, so they rejected his application."