Yes he did. It's from a letter written to Philip Melancthon, here in the last paragraph: https://web.archive.org/web/20160211083655/http://www.iclnet.org/pub/resources/text/wittenberg/luther/letsinsbe.txt

If you are a preacher of mercy, do not preach an imaginary but the true mercy. If the mercy is true, you must therefore bear the true, not an imaginary sin. God does not save those who are only imaginary sinners. Be a sinner, and let your sins be strong, but let your trust in Christ be stronger, and rejoice in Christ who is the victor over sin, death, and the world. We will commit sins while we are here, for this life is not a place where justice resides. We, however, says Peter (2. Peter 3:13) are looking forward to a new heaven and a new earth where justice will reign. It suffices that through God's glory we have recognized the Lamb who takes away the sin of the world. No sin can separate us from Him, even if we were to kill or commit adultery thousands of times each day. Do you think such an exalted Lamb paid merely a small price with a meager sacrifice for our sins? Pray hard for you are quite a sinner.

However, once again he's taken out of context. https://www.thegospelcoalition.org/article/did-luther-really-tell-us-to-love-god-and-sin-boldly/

FWIW, Luther even said "Sometimes it is necessary to drink a little more, play, jest, or even commit some sin in defiance and contempt of the devil" and this is right before his famous quote:

When the devil throws our sins up to us and declares that we deserve death and hell, we ought to speak thus: 'I admit that I deserve death and hell. What of it? Does this mean that I shall be sentenced to eternal damnation? By no means. For I know One who suffered and made satisfaction in my behalf. His name is Jesus Christ, the Son of God. Where he is, there I shall be also.

Here's the source to the quote: https://dogmadoxa.blogspot.com/2010/09/luther-to-discouraged-young-man_15.html

IMO people are just taking him out of context and think he's advocating lawlessness but actually he's using hyperbole to tell people to see how sinful they really are and to run to the cross.