Dank refers to good bud and or anything that is good
sauce just means its covered in the goodness
me: hold on lemme go check and see if i still have the movie the pass
the dude: word
me: you nukkkkkkkkka we don't even have to pay for the movies i still have it.
the dude: hells ya dude, thats the dank sauce
Also, this can be used for anything besides pot that needs to be described in the realms of excellence. For example you
Pothead Dos: "Straight up foo, lets cop that and get lit and jump off the roof of each others house!"
*Used only as an interjection, not as an adjective.
Danksauce! You got Halo 2!