The concept and recipe for bananadine originally appeared in the March 1967 issue of the Berkeley Barb, a famous underground newspaper published in Berkeley, California. The original article did not hint that it was a hoax, and as this sort of article fit right in with the regular items in the Barb, many believed it to be true, including many students at the University of California.
This caused a minor sensation, with students attempting to make bananadine and, even while failing, trying to raise awareness of this wonderful opportunity to get high. The New York Times quickly took up the story, and reported that "beatniks and students chanted 'banana-banana' at a 'be-in' in Central Park" and paraded around carrying a two-foot wooden banana. This report did more to raise awareness than any be-in could, making it an national headline. The Food and Drug Administration announced that it would be investigating "the possible hallucinogenic effects of banana peels", although researches at New York University beat them to it and later that year announced that banana peels have nothing psychedelic in them. This report was less sensational than the original story, meaning that many people never got the news that banana peels are just as boring as we always suspected.
This did not stop William Powell from including it in The Anarchist Cookbook in 1970, although he must have been aware that it was a hoax. He is also the one who gave it the expanded scientific name, Musa sapientum Bananadine, Musa sapientum being the biological nomenclature for the banana at the time. Presumably, the drug would be called Musa acuminata Bananadine these days.
I can't help but suspect that for a few months in 1967 Bananadine served as an excellent source of plausible deniability for hundreds of drug users -- "no man, I'm high, but it's just banana peels. It's perfectly legal!" Since then it has served as a source of amusement for generations, and no doubt as a source of frustration for many. Surprisingly, the myth that you can smoke banana peels seems to still be believed by many, although tested by few.