A craft hippie is, simply, a hippie who makes hippie culture themed arts and crafts, and sells them. Examples include beaded necklaces, tie-dye t-shirts, dream catchers, etc. It is not uncommon for such hippies to travel in Volkswagen buses to sell their goods.
Davis: Hey, Bryan, where did you get that nice hemp bracelet?
Bryan: Oh, There was a craft hippie at Safeway selling them out of his van!