No, I don’t think this is true, or at least not universally so.
I’ve a relative doing time here in Kansas, and according to him, the ones who control the trafficking at his facility are themselves pretty low-level; they’re in for burglary, theft, battery, and so forth. One was serving a sentence for something like aggravated indecent solicitation of a minor, hardly a drug kingpin charge. These are people who were street dealers outside too.
The ones who were actually higher up in the drug organizations didn’t handle retail sales outside, and they don’t inside either. There may be someone more sophisticated running the import business getting the stuff brought in, but they’re not the ones dealing out on the yard or storing the goods in their locker.
In some ways, dealing inside is easier: you certainly have more opportunity to find out about your customers before you sell to them, and you know exactly where to find them if the deal goes south. The snitches are usually well-known, and your people on the outside or the guard you compromised can look up the histories on everybody. On the outside, the neighbors who are not drug users can pose a threat or keep the cops stirred up; inside, there’s a pretty fair bet that all or almost all of the neighbors are your customers too, and depending on the facility the guards may take a very laidback approach–inmates who are stoned aren’t dreaming up ways to cause trouble.
If you are in prison and willing to deal drugs, there’s this whole captive audience just waiting for your wares. They may not pay as much as you could make if you were outside, but you’re in prison too, and this is the market available.