Don’t pick up the ketamine in there until you talk to Squidward, I had this same problem and every time I did I had picked it up before walking up to him
what k0rnholio is saying does sometimes interfere with Squidward event starting but most of the time even if you don't take the ketamine Squidwards event still won't start, I find this to be a completely random bug with no other fix but to reset the game.
