This occurs during a fight scene in which one of fighters inadvertently exposes one of her breasts. One actor comments admiringly "Now, that's a titty!" Jim Breuer says "Fully, man," meaning that he completely agrees with the assessment of the sight or that the exposure is complete or both. Likely, what he means to say next is "That is an official titty," but he's a stoner so his drugged-out verbal faculties substitute the last word he said that ended with a "y." And it comes out "That is an official fully."
It probably makes more sense if you watch the movie stoned. In that state, it's also likely that the movie will strike you as amusing. These are two powerful arguments for just saying "no" to drugs.