Samael Aun Weor and Helena Petrovna Blavatsky both warned of a sect of Tibetan mystics known as the “red hats.” This has been taken by many Gnostic and Theosophical students literally, spreading fear of any Tibetan that utilizes a red hat or crown. Later of course, Samael Aun Weor investigated this matter more deeply, and corrected his warning to be directed squarely at those he called "Dugpas," which, again, literally, could be interpreted as a reference to the Drukpa sect of the Kagyu school, yet Drukpa means "dragon," is is thus actually referring to those who have awakened as "black dragons," black magicians.
It should be known that three of the four Tibetan Buddhist schools use red hats in their rituals. Even the great master Padmasambava (known as the “second Buddha” by Tibetans) donned a red hat. Therefore, it is clear that the use of a red hat does not automatically denote a follower of black tantra.
The Red Hat Tradition of the Kagyu
The term “red hat” in Tibetan is “Shamar.” Shamar-pa or “Red Hat Lama” is a tulku or reincarnated Lama of the Kagyu sect of Tibetan Buddhism who does indeed wear a red hat as a symbol of his position. Although the majority of Tibetan lamas wear red hats, the name “Shamarpa” means “the red hat” and his entourage and monks are considered “those that follow the red hat.”
During the time of the 8th Dalai Lama (1770's), the Shamarpa was incarnated as the brother of the Panchen Lama, a very high Gelugpa, seen as second only to the Dalai Lama. After the death of the Panchen Lama, his reincarnation was being sought. In the meantime, because he didn't inherit the wealth left by his late brother the Panchen Lama, the Shamarpa colluded with the Gurkas of Nepal and pretended that he was kidnapped, in order to weasel a ransom which he thought was rightfully his. The 8th Dalai Lama and his Kushog (advisors) saw through this obvious farce and didn't pay the ransom. Not only did the Shamarpa make it out of Nepal alive, but the Nepalese Gurkas attacked Tibet, killing thousands of monks and lay people. This problem, along with others, was caused by the Shamarpa's ill will. Because of this, the Dalai Lama banned the reincarnation of the Shamarpa forever. The Lamas of the time took his famous red hat and buried it under the steps to the Jokang Temple so that anyone going to the most powerful temple in Tibet would trample the hat of the Shamarpa.
In the 1960's, the 16th Karmapa asked the Dalai Lama for his permission to once again recognize the Shamar Lama reincarnation. The Dalai Lama, trying to be a good statesman and repair wounds between the Gelugpa and Kagyupa orders, agreed (the Dalai Lama was very young and under tremendous political pressure and ordeals at the time). The current Shamar is the first one to be recognized in two hundred years. The Shamarpa does not look well upon the Dalai Lama or the Gelugpa.
The present Shamar Lama is very well known for his direct and in depth connection with the Drukpa Kagyu that live in Bhutan (the Tibetan word for people from Bhutan is Drukpa).