Aims: Evidence for case–control studies suggests that cannabis use is a risk factor for the development of psychosis. However, there have been limited prospective studies and the direction of this association remains controversial. The primary aim of the present study was to examine the association between cannabis use and the incidence of psychotic disorders in people at clinical high risk of psychosis. Secondary aims were to assess associations between cannabis use and the persistence of psychotic symptoms, and with functional outcome. Methods: Current and previous cannabis use were assessed in individuals at clinical high risk of psychosis (n = 334) and healthy controls (n = 67), using a modified version of the Cannabis Experience Questionnaire. Participants were assessed at baseline and followed up for 2 years. Transition to psychosis and persistence of psychotic symptoms were assessed using the Comprehensive Assessment of At-Risk Mental States criteria. Level of functioning at follow up was assessed using the Global Assessment of Functioning disability scale. Results: During follow up, 16.2% of the clinical high-risk sample developed psychosis. Of those who did not become psychotic, 51.4% had persistent symptoms and 48.6% were in remission. There was no significant association between any measure of cannabis use at baseline and either transition to psychosis, the persistence of symptoms, or functional outcome. Conclusions: These findings contrast with epidemiological data that suggest that cannabis use increases the risk of psychotic disorder.