The term "420" (pronounced four-twenty, not four hundred twenty) as slang for marijuana has been growing in popularity for a few years now, but apparently started back in the 70's. If you look at it as a date, American style with the month first and day second, you get 4/20 for April 20th.
As in "Hey it's 4/20 day...light up a fat one!". That kind of thing...
The origin of the term is under some dispute. Here is one account for "concerned parents"...
http://parentingteens.about.com/cs/mari ... eaning.htm
and here is a sympathetic site with an oddly similar account...
http://www.concept420.com/what-is-420.htm