It’s a common bait-and-switch joke. “I have Ligma” “What’s Ligma?” “Ligma Balls!” (The joke being that “Ligma” sounds like “Lick My”)

Maybe you’re familiar with a similar joke: “Hey, do you think it smells like updog in here?” “What’s updog” “Not much, what’s up with you?” (Here, the joke is that “What’s updog” sounds like “What’s up, dawg”)