"Hope you like turkey!" - what's funny about that?

It wasn't about why they couldn't get a permit, it's that they probably didn't even try because they thought it was stupid or didn't feel it was worth the effort.

The event you are speaking of didn't happen when they couldn't get a permit (i.e. it's not like they were trying to get some kind of permit in this scene and the cops refused to grant it, and the remark was made about that refusal). The situation was that they had to leave because they didn't get whatever permit previously. Pacino made the comment when the group was kicked out - something he did not agree with or respect.

The "hope you like turkey" comment was meant as a flippant, facetious remark to the officers, implying that they thought the whole permit situation was irritating, unwarranted, and now the sandwiches (which they were enjoying) that they had to abandon are available for the officers to eat (likely not the officers' goal; but the insult is in the implication that the officers were acting as bullies without reasonable cause). Something along the lines of a very subtle insult to the officers: "I have no respect for your request, I'll comply because I have to, I don't believe you have a good reason to kick us out, and by the way, enjoy the free lunch, you jerks."

There is also an implied "if you're kicking us out, you can clean up our mess, too".

The group laughed in support of Pacino's insult and sarcasm.