Slang phrase for smoking marijuana. From the movie Super Troopers wherein the troopers are messing with some stoned college-aged kids that they've pulled over on a highway. Lt Ramathorn asks them if they know why he pulled them over and they reply that they don't know. Ramathorn then starts saying mto them, "Littering aaannd... Littering aaannd..." several times and then finally says "Littering aaannd......smokin' the reefer."
"What are you doing, Dude?"
"Not much right now - just littering and..."