Recent studies have found that cannabinoids may improve neuropsychological performance, ameliorate negative symptoms, and have antipsychotic properties for a subgroup of the schizophrenia population. These findings are in contrast to the longstanding history of adverse consequences of cannabis use, predominantly on the positive symptoms, and a balanced neurochemical basis for these opposing views is lacking. This paper details a review of the neurobiological substrates of schizophrenia and the neurochemical effects of cannabis use in the normal population, in both cortical (in particular prefrontal) and subcortical brain regions. The aim of this paper is to provide a holistic neurochemical framework in which to understand how cannabinoids may impair, or indeed, serve to ameliorate the positive and negative symptoms as well as cognitive impairment. Directions in which future research can proceed to resolve the discrepancies are briefly discussed.