On the first day of spring break, Brock Stone pulls up to his son Woodie's shack and announces he wants him to come work with him for the week to improve his image with the company. Woodie tells him he isn't interested and just wants to surf. Mondo arrives at the beach expecting a big blowout and is disappointed when the beach is deserted. Woodie has never known anything else but Lonnie shows them a video of when the beach was a happening place before they outlawed alcohol on the beach.
Trying to make the best of a bad situation, their boombox promptly breaks and all they have left is a bottle of semi-hard lemonade which Wadska shows up and quickly starts drinking. When the police arrive to stop him, Wadska jumps into the ocean and swims just far enough offshore to pass out of the police jurisdiction. Surprised at this turn of events, the boys investigate and discover that if they get 20 feet from the shoreline they are safe from the local laws. Paddling out, they set up their tube and start drinking. The police arrive and tell them they are still subject to US drinking-age laws until they counter that their "vessel" is flying under the flag of Jamaica with no drinking age which is good enough for the police.
When word spreads of the escape from the law, everyone heads offshore and joins the floating party, declaring the area a floatopia. Woodie and Mondo quickly set up shop selling drinks but panic sets in when the booze starts to run out. At that moment a tanker ship full of Shartz Beer arrives and Woodie cuts a deal to make Shartz beer their official supplier in exchange for numerous benefits. While Woodie celebrates in his company suite on board the ship, Mondo is stuck serving drinks while trying to deal with a drunken Jeena who is irritated with Turk for partying with other girls.
When Woodie arrives back, he relieves Mondo at the bar and tosses him the key to the corporate suite to try to get Jeena some rest. While Mondo tries to find some water to sober Jeena up, she gets undressed and invites him into bed with her. deciding to do the honorable thing, Mondo wraps a blanket on her and takes her to shore to try to sober her up there. On the way, he sees what a cesspool of depravity their floatopia has become. Leaving Jeena with his mother, Mondo returns to set things right. Breaking Woodie out of his floating castle, Mondo shows him the horror that their place has become with even Jon Gosselin setting up. Trying to restore some sanity, they find themselves banned from floatopia.
Woodie tries to enlist his fathers support in shutting it down but finds out that his father bought Sharz Beer just to take advantage of the situation. About to give up hope, Mondo and Woodie find that Wadska was also exiled by Turk taking over and joins in the plot to destroy floatopia. They discover that the bar is the weak spot and if they can take it out the whole works will come apart. On the way, a sobered-up Jeena stops and thanks Mondo for not taking advantage of her. Mondo feels stupid for letting the chance slip but feels better when Jeena kisses him.
As Mondo and Woodie begin their assault by jet ski, Babs also announces he's ready to help which surprises Mondo but Woodie takes off telling him he'd never agree to what his mother is about to do. as the race toward Floatopia, Turk sound the alarm and everyone tries to fend off the attack. At that moment, Babs and Wadska launch their distraction as Wadska hacks into the giant video screen and babs flashes her breasts. The distraction works for a little while until the video goes out and Turk takes out Mondo and the jet ski with a bazooka launcher full of shot glasses. Woodie launches himself to the bar with a safety pin and punctures the tube, causing the floatopia to sink.
Back on the beach observing the debris, the boys are disappointed. When Brock arrives, Woodie apologizes for ruining his business but Brock points out that it will be one of his companies that cleans up the mess and will make even more money although he fires Woodie in the process. seeing an unopened can of beer float ashore, Woodie and Mondo vow to never drink again, Wadska grabs it and runs down the beach as the police take aim with their rifle.