They were members of a dwarven drug cartel.
Sleepy - Cough syrup addict
Grumpy - Amphetamines (bordeline paranoid/shcizophrenic)
Doc - He wrote the prescriptions
Sneezy - Cocaine (Should be obvious)
Happy - Manic-Depressive (we saw him only on his "Good Days")
Dopey - Huffing aerosols, glues, and solvents
Bashful - Hallucinogens (sees nekkid girls everywhere doin strange things)
"Snow White" was their code name for "Crack Ho of the Week"
"Prince Charming" was a local pimp who was always looking for new talent
The "Diamond Mine" was really a crystal meth lab.
Finally, the "Wicked Witch" was a narcotics cop with a sophisticated remote surveillance system, who was always trying to burn the dwarves in a sting operation with her "Majic Apples."