According to Wikipedia, it's origin is the Jonestown Massacre, but it means to accept wholeheartedly or blindly wihout critical examination:
"Drinking the Kool-Aid" is a metaphor, used in the United States and Canada, that means to become an unquestioning believer in some ideology, or to accept an argument or philosophy wholeheartedly or blindly without critical examination. The phrase can sometimes have a negative connotation, or can be used ironically. The basis of the term is a reference to the November 1978 Jonestown Massacre, where members of the Peoples Temple were said to have committed suicide by drinking a "Kool-Aid"-like drink laced with cyanide.
Objections notwithstanding, the phrase is commonly used in a variety of contexts to describe blind, uncritical acceptance or following, generally in a derogatory sense.
While similar, Urban Dictionary's second definition is a bit more simple: To completely buy into an idea or system, whether good or bad.
In a political sense, liberals will often say that people who align themselves with the tea-party movement are 'drinking the Kool-Aid.' And conservatives will often use the phrase for union members.
Considering the negative political connotations, you would think that a political group - like, say the Maumee Democrats (Ohio), would be 'sensitive' to the phrase, especially when it comes to handing out treats at a festival.
Apparently, the irony was lost on this group of Democrats as this is what they distributed to kids during the Maumee Summer Fair parade on Saturday:
Can you say 'stuck on stupid'???
***Thanks to my friend Friedrich VonHerrenhausen (not his real name) for sharing this with me!