Harold (John Cho) and Kumar (Kal Penn) do not succeed in getting a replacement tree for Harold's father-in-law's (Danny Trejo) Christmas tree after:
NPH survived the second movie only because Jesus kicked him out of heaven for stealing all his women.
After leaving NYC on Santa's sleigh, they both have revelations that tie up their storylines, all thanks to the magic joint (revealed to be a gift from Santa) that lit the tree on fire:
Harold confronts his father-in-law demanding his respect while he stays at his home. This in turn earns him his respect, as his father-in-law was worried his daughter was married to a spineless wimp.
Kumar gets his act together (yet again), and patches things up with Vanessa, who is pregnant with his child.
Harold and family wake up to find a new tree, fully decorated, also a gift from Santa.
The movie ends with everyone at Harold's house for a Christmas party, and Harold and Kumar smoking up on Harold's front step as Santa flies by, taking a bong hit.