Quinn is running two businesses at the same time. The "restaurant" and the drugs. We know that she started all this (at least the drugs) last year since both her and Riona got into B&R as part of the "rejects" as per Tommy's word, and Quinn also remembers the hazing of being a daughter as she talks about it if the MC decides to sit with her and Sage in the cafeteria. In one of Riona's talks with Quinn in the HOT backyard, they talk about the free tuition, and how the rumor has been spreading. If I remember right, they both also have their scholarship paid as well. Seeing Mona's files being deleted by Burke clearly means that it is real, but it is something Quinn doesn't like to have spread. The how and why this all started is still unknown, though.
Now, who is part of each business. Quinn is the leader (at least with the HOTs) and until recently Rio was her right hand in both businesses. Camila and Mona are also in both, as seen with the girls' conversation in Mona's dorm. Due to that, Lily found out, but so far she seems to only be working in dealing drugs. Now the other students. Sarah and Melanie are also part of the "restaurant," but it's not confirmed if they are also selling drugs. Then we have Quinn and Tommy's conversation in the DIK basement, in which it is confirmed that Heather, Elena, John Boy, Tommy and the aforementioned girls all know about the drugs, but not Sage as she would be against it. Tommy even tells that if Sage ever finds out, that Quinn can use the DIKs to take the blame. Rusty knows about it all too, but he doesn't want to be part of it. As an extra, we also know Quinn is selling to the Alphas, being Dawe the only confirmed so far, and other students like Sally, Karen and Rich.
Reasoning on why Sage doesn't know about any of this? In a way she does. As mentioned a lot of times in the game, there are plenty of rumors in B&R, of note the "HOT's free tuition." But so far it's just that, rumors. And if her sisters, whom Sage trusts, tell her they are not truth, why would she not believe them? I also understand it's a little forced, but it's not completely implausible. Sage is very happy having Quinn as her VP. As she states to the MC if he decides to stay with her, Quinn knows what to do without Sage asking her to do it. Basically Quinn holds the reins and Sage doesn't know what she does at all. This is all on Sage of course, as it's her job to supervise Quinn, how she does the job and where she gets the money. Quinn knows this and takes advantage of her, as seen with the preps party for example. But as Riona has stated, expanding the business means more exposure, and sooner or later it's a fact that Sage will find out about it. And when that happens, it will be quite the shitstorm for the HOTs.
Now, how much the MC knows about all this. Not much really. He knows about the "restaurant" to some extent, no matter if he is a customer or not. If buying, he knows which girls are part of it. But about Burke and the whole "free tuition" matter he has no clue. Maybe some suspicions, but that's all. Same with the drugs. He knows that some of them use drugs, but not that Quinn is selling them. He also may know that the HOTs are having trouble with money after talking with Rio and Quinn, having the option to give Rio money, and pondering if helping Quinn with his 5K of the inheritance. In a way and with what little he knows, the MC may not see what the girls are doing as bad per se, but just as a way to survive. Of course, Burke and the tuition will change all this when the MC finds out.
