Like teabagging, the man is dipping his testicles into the mouth of either an unsuspecting (usually sleeping) victim or into the mouth of a partner for sexual gratification. The distintion between teabagging and potato sacking is that only a man with extremely large testicles can pull it off.
When you give someone money for weed and they screw you over,you give them the potato sack treatment. This is when you put your dealer in a potato sack and put him in the back of the car and drive around until he pays up.