Ryan Grim is your guide:
The origin of 420 had nothing to do with a police code, though the San Rafael part was dead-on. A group of five San Rafael High School friends known as the Waldos — by virtue of their chosen hangout spot, a wall outside the school — coined the term in 1971. The Waldos never envisioned that pot smokers the world over would celebrate each April 20 as a result of their foray into the Point Reyes forest. The day has managed to become something of a national holiday in the face of official condemnation.
(Image from a gif posted by Tumblr user teniel)
The Dish 