Bay Area Slang, has many meanings which are ambiguous. The word has a certain feel to it and can describe many situations. Associated with the terms "cutthroat" and "cut" as in "in a cut." Some say it originated in Vallejo, but everyone agrees it originated in the Bay.
As an Adjective:
1) Hidden, Somewhere away from the general view. Usually a "shady" or "sketchy" area, but used in a generally positive sense. In a cut.
2) Used to describe a person who is streetwise and knows many shady or dangerous people.
3) Used to describe a situation in which illegal or immoral activity is happening, but usually with a positive spin
As a noun
1) Reference to a friend or associate.
2) Sometimes refers to pussy, or general action.
3) Can refer to good ass weed that doesn't look like kill.
X: I took this girl, broke into the abandoned Lucky's, and fucked her in the candy aisle.
X: There was still candy there.
X: Then I didn't have a place to crash so I went to my homeys old apartment building and went down to the cutty ass basement and crashed there.
Y: How did you get past security?
X: I went in through a cut.
Y: What'd you sleep on?
X: I went to the laundry room, stole hella laundry, and laid it out like a bed.
Y: Cutty as fuck.