It is widely accepted that in 1971, a group of teenagers at San Rafael High School in San Rafael, California, calling themselves "The Waldos", used to meet every day after school at 4:20 p.m. to smoke marijuana at the Louis Pasteur statue.   The term became part of their group's salute, "420 Louis," and it eventually caught on more widely. Many cannabis users continue to observe 4:20 as a time to smoke communally. By extension April 20 ("4/20" in U.S. dating shorthand) has evolved into a counterculture holiday, where people gather to celebrate and consume cannabis. 
There are also many apocryphal urban legends attempting to explain the origin of the term. Two of the most common of these are that 420 refers to the number of active ingredients in cannabis, or that it is police dispatch code for cannabis. In actual fact there are around 315 active chemicals in cannabis, varying depending on the exact plant used, and 420 has never been verified as the police dispatch code for anything in any locale.