The word "fagbag" is used to define a single pound of marijuana.
As you may or may not know, a pound of marijuana is a ridicilious amount to have at one time. So, the term originates from all the faggot attention whores that try to look cool around your school when they shout out and brag about the absurd amounts of marijuana they consumed the day before.
It's typically used to make fun of those types of kids in a sarcastic high-pitched tone of voice.
Attention whore: "Oh, my God! I'm still so high from yesterday after smokin' so much weed yesterday!"
Person 1: "Dude, Naithen. You don't have to yell it, we're right next to you."
:::Attention whore walks away:::
Person 1: (in a mocking tone of voice)"O, mah gaw! I sm0k3d a hug3 fagbag yest3rdaay."
Person 2: (laughs) "Yeah, I know man. He's a faggot."
It's actually 2 expressions combined, duche bag (- historically known as an instrument of cleanliness bestowed upon a dirty piece of female genitalia) and fag(Short form for faggot aka homo).
This expression is used when a duche male is sleeping with a lot of other men. He's like a male - gigolo, for men!