We get a little montage of Orange practicing this bathroom speech. It's about this one time that he was selling marijuana for a girl and went to meet some dude and had to pee. He walks into a bathroom, only to find it filled with sheriffs and a German Shepherd. He keeps it together, pees, and walks out.
It's a great story, and totally made up. He practices it enough to make it seem authentic.
He says it on some random rooftop, in his home, in some very graffiti-ed place, and finally at the bar with Joe and the gang.
Story within the story: While he's peeing, the sheriffs are telling their own story about a guy who almost got himself killed going for his car registration. He should have known to keep his hands on the dash when they asked him.
Orange is pretty convincing; he admits he panicked when he saw the sheriffs and the dog, who probably smelled the weed on him.
Joe says he handled the situation well. He's in... but maybe he shouldn't be so excited. Poor Orange.