Anthony "Man" Stoner (Tommy Chong), a jobless, Cannabis smoking drummer, is told to either get a job by sundown or be sent off to military school by his parents. Anthony leaves the house in a 1967 Volkswagen Beetle convertible (which had his father's Rolls Royce radiator grille on the front), a car which is subsequently left smoking on the side of the road. Anthony is picked up while hitchhiking by the equally enthusiastic smoker Pedro de Pacas (Cheech Marin). The license plate reads MUF DVR ("Cunnilingus"). They share a large Joint (marijuana), which Man says is made with "mostly Cannabis (drug)" and "Labrador" (essentially dog feces, as his dog, a Labrador Retriever, had eaten his stash). Police find their car parked on a traffic median with them in it, discover that they are clearly stoned and arrest them. At trial, the pair are released on a Legal technicality after Anthony discovers that the judge is drinking vodka.
Cheech & Chong are on a mission to siphon gasoline for their next door neighbor's car, which they apparently "borrowed," and continue with their day; Cheech goes to work at a movie studio and Tommy Chong (Tommy Chong) searches for something to smoke (a Roach (cannabis culture)), followed by him revving up an indoor motorcycle and playing extremely loud rock music with an electric guitar that disturbs the entire neighborhood. Cheech Marin (Cheech Marin) gets fired from his job and they go to see Donna (Evelyn Guerrero), a welfare officer and Cheech's girlfriend. Cheech successfully seduces Donna, under her objections, and gets her in trouble with her boss. The doped-up duo are expelled from the building and, in an attempt to find alternative means of income start writing songs like, "Mexican Americans" and "Beaners."
Cheech and Chong (Cheech Marin and Tommy Chong) are driving a limo through the desert. Chong, who has decided to stop doing drugs for a while, is talking about rock and roll, and Cheech is falling asleep, but Cheech is narrating over what's happening. He says that "things are tough all over" and that he's going to tell their story.
Cheech Marin and Tommy Chong play versions of themselves being invited to Amsterdam for a film festival devoted to Burt Reynolds and Dolly Parton. After initially assuming that Cheech was Reynolds, the promoter soon finds out that neither Reynolds nor Parton will appear, forcing the festival to be canceled. In need of a replacement act, he goes to Cheech and Chong for help, and the duo, which has not performed live on stage in several years, happily volunteers to give a live performance.