What Olivant said.

Frankie is complaining about the Rosatos selling drugs in the old neighborhoods, and presumably in other areas where it was supposed to be regulated when Vito made his deal. Moreover, they made most of their money selling drugs, in the old neighborhoods and in the "dark areas" where they recruited blacks and hispanics instead of Sicilians. In short, they were not "old school" mobsters, like Frankie and Clemenza before him.

Not that Michael cared. All he was concerned about was the bottom line. Sales of drugs in the ld neighborhoods or other forbidden places was a sop Michael used when it suited him, as was the case in III when he went after Joey Zasa for it.