The festival was founded in 1987 by Steven Hager, an American writer, activist, and strong proponent for the legalization of marijuana. He first conceived the event as a harvest celebration to promote the personal cultivation and use of cannabis. With such liberal drug laws in Amsterdam it came as no surprise when the city was announced as the host venue.

In 1988, Hager took on the role as editor of the High Times magazine, a name now synonymous with the Cup. Hager was also very active in the counterculture movement and by the sixth year he began introducing a spiritual aspect into the event. Each day at 4:20 (the U.S. penal code used for marijuana possession) people gather by the main stage for an open mic session. People are encouraged to exchange ideas and many of the speakers talk about how marijuana brings them closer to God.

In 1997, the Counterculture Hall of Fame was created to recognize those who had helped shape the movement. The inductions are made every year on Thanksgiving as part of the Cannabis Cup awards show. The first person to be inducted was reggae legend Bob Marley. Other notable inductees include Jack Kerouac, Louis Armstrong, and Bob Dylan.

In recent years the festival expanded internationally to the United States, first in the form of the High Times Medical Cannabis Cup, and then as the High Times Cannabis Cup (in states that have legalized recreational marijuana). The first event took place in San Francisco (natch) in 2010, and Cups now take place in Los Angeles, Denver, Seattle, Portland and beyond.