Hi and welcome,
I may be able to help you with this.
My backstory, if you look at my signature, is that I am raising y sister's kids. She is a heroin addict. I currently ave legal custody of them, we are in the process of severing her and their father's parental rights so that we can legally adopt.
My sister has been in and out of jail, all shoplifting, she is now in prison doing a 5 year sentence for parole/probation violations and, of course, more shoplifting.
So, when the youngest was born she was born addicted and DYFS stepped in. At the time the boys were in the custody of their maternal great grandmother. Yes, baby daddy's grandmother. She told the state that she couldn't do it. That 2 young boys were hard enough she could manage and infant, especially one who may have special needs.
When we took custody of the baby we sat down with GGM and explained to her that we would like to keep the children together (because I have my own issues having been separated from my sister in childhood) and would she consider allowing us to have custody of them.
She is a good lady, but she is old. These are young, active boys. She agreed and we assured her that we would make sure that she could and would see them whenever she wanted.
Also, after my niece was born, there was a period of time where we allowed my sister to see the kids. Because she wasn't welcome at my house (stole from me) we did the "meet someplace" thing. We had problems with that. If she showed, she was late. If she showed we were never sure what we were going to get. Normal, overly dramatic and weepy, angry, or so stoned she barely noticed you were in the room. We began to see some mood problems in the oldest after seeing her so we stopped it. The rule now is that she has to be sober, and I mean in active recovery, meeting, sponsor, home group, drug free, for a year before she can see the kids again.
So here is a bit of advice from someone that has been there done that. Hopefully you aren't bored with me yet.
1) Talk to their dad. From your post I am assuming that the kids live with you. He may have no issue making custody legal if you assure him access to his kids.
2) Consult and attorney who specializes in family law. It was easier for us because the kids were removed from their custody and the father is gone with the wind and my sister is in prison.
You daughter is a addict which can be easily documented through her long legal history. If she makes an issue of calling the police (which I doubt because she probably doesn't have a great relationship with law enforcement, and is likely to have warrants) let her, but make her aware that 1) you will tell them that she is a drug addict and under the influence and 2) you will also inform them of her theft from you.
Are your grand kids in any type of counseling? If not, try to get them into it. You may get a better feel from a child psychologist about whether, or not, it is a good idea to stop visitation.