Recent advances in knowledge about cannabinoid receptor function have renewed interest in the association between cannabis and psychosis. Converging lines of evidence suggest that cannabinoids can produce a full range of transient schizophrenia-like positive, negative and cognitive symptoms. Cannabinoids also produce some psychophysiological deficits also known to be present in schizophrenia. Also clear is that in individuals with an established psychotic disorder, cannabinoids can exacerbate symptoms, trigger relapse, and have negative consequences on the course of the illness. Increasing evidence suggests that early and heavy cannabis exposure may increase the risk of developing a psychotic disorder such as schizophrenia. The relationship between cannabis exposure and schizophrenia fulfills some, but not all, of the usual criteria for causality. However, most people who use cannabis do not develop schizophrenia, and many people diagnosed with schizophrenia have never used cannabis. Therefore, it is likely that cannabis exposure is a "component cause" that interacts with other factors to "cause" schizophrenia or other psychotic disorder, but is neither necessary nor sufficient to do so alone. In the absence of known causes of schizophrenia, however, and the implications for public health policy should such a link be established the role of component causes such as cannabinoid exposure should remain a focus of further study. Finally, further work is necessary to identify the factors that underlie individual vulnerability to cannabinoid-related psychosis and to elucidate the biological mechanisms underlying this risk.