This is an epic expression, coined by Kontraband enthusiast and post whore tmc420.
It translated directly to 'whore', but is used in such a manner to replace terms such as 'shitty', or 'that's too bad'.
Daag, we're out of beer already, and your sister still looks fugly. To the liquor store, and don't spare the whip!
Daag, dawg - you just paid $15 for a bag of oregano!