I'm certain it's criminal of him to be providing alcohol to his underage daughter too. Knock out a ton of problems at once by reporting him for giving alcohol to minors some time when you know she's been drinking. You could potentially get him out of your grandparent's house AND maybe help his daughter get her life straightened out before it's too late for her and she winds up just like him.
Depending where you live, it is not necessarily illegal to give your own "child" alcohol in your home before age 21.