The latest edition of the Canadian Journal of Psychiatry has a comprehensive review of the evidence on whether cannabis contributes to causing psychotic mental illness – the best known being schizophrenia.
It has been known for a long time that there is a link between cannabis use and psychosis, but it was not known whether cannabis contributed to the development of psychosis, or whether people with psychosis were just more likely to smoke cannabis because it helps dispell some of the unpleasant emotions and feelings associated with the condition.
There is now good evidence that cannabis can contribute to the cause of psychosis, particularly during adolescence and early adulthood.
At a population level, this effect is detectable but small.
At the individual level, the effect seems to be quite variable. Recent research has suggested that the risk of developing psychosis when using cannabis is heavily influenced by what version of the COMT gene a person has.
Link to August 2006 Canadian Journal of Psychiatry.