The government says it will review all academic and clinical studies linking cannabis use to mental health problems.
Cannabis was reclassified so police could target harder drugs
The Department of Health says it is now generally agreed among doctors that cannabis is an "important causal factor" in mental illness.
It follows a mental health group's call for the government to investigate "the link between cannabis and psychosis".
Rethink said its reclassification from a Class B to Class C drug sent a "confusing message" to young people.
The charity wants the Commons Health Select Committee to launch an inquiry into the effect cannabis has on users.
Its call was also backed by health campaign group Sane which wants the classification of cannabis to be reversed.
A Department of Health spokesman said it was already commissioning a review.
"We have no objection to the health select committee looking into this," he said.
"However we are in the process of commissioning an expert review of all the academic and clinical evidence of the link between cannabis use and mental health, particularly schizophrenia.
"There is medical clinical evidence now that there is an important causal factor between cannabis use and schizophrenia - not the only factor, but an important causal factor. That is the common consensus among the medical fraternity."
Cannabis was reclassified last year so that police could target hard drugs.
Home Office figures released on Friday showed that arrests for possession of cannabis fell by a third in the first year of its reclassification.
However, Rethink said there had been a 60% increase in people who smoked drugs and had mental health problems in the last five years.
Most medical experts agree that smoking cannabis in itself does not cause mental illness, but that people who are predisposed to psychosis are much more likely to develop symptoms if they use the drug regularly.
"Cannabis is not risk free," Rethink chief executive Cliff Prior said.
"We have known for years that using cannabis makes the symptoms of schizophrenia far worse in people who already have the illness."
Calling for further research, Mr Prior said the government should "concentrate on the real and specific mental health dangers, not general warnings that no-one takes seriously".
Marjorie Wallace, Sane chief executive, said Sane has campaigned for 18 years about "the destructive link between cannabis and schizophrenia" and that professionals and governments had ignored years of "mounting evidence".
"Far from it being a relatively harmless recreational drug - for vulnerable people, especially teenagers, the innocent spliff in the playground, or chilling out, could trigger a journey of lifelong disintegration," she said.
Campaigner Terry Hammond says his son, Steve, developed schizophrenia after taking cannabis resin.
"I have got absolutely no doubt at all, and neither has Steve - Steve is absolutely clear about it - that it was the cannabis that triggered it.
"It may not have been the absolute cause of it, but it was the trigger.
"It is Russian roulette," he said. "For some people it can ease pain, but for others it can be an absolute disaster."
But Steve Barker, of the Campaign to Legalise Cannabis Association, said that by prohibiting cannabis it was preventing information about its use being readily available, while cannabis could in fact aid those with medical problems.
"There is a larger proportion of people with mental health problems who claim cannabis reduces their symptoms than those for whom it is a problem," he said.
"To criminalise people and to put them though the criminal justice system rather than give them the medical support they need is completely wrong."