The Beckley Foundation, a charity which numbers senior experts and other academics among its advisors, said banning cannabis has no impact on supply and turns users into criminals.
"Although cannabis can have a negative impact on health, including mental health, in terms of relative harms it is considerably less harmful than alcohol or tobacco," says the report by the Foundation's Global Cannabis Commission.
The government is pressing for cannabis to be re-classified in law as a Class B drug compared with its current, less serious, Class C classification.
Authorities are concerned notably by the growing prevalence of the potent "skunk" form of the drug. Around 80 percent of cannabis seizures are of this strain, said to be linked to mental health problems, official figures show.
The Beckley Foundation, a charitable trust, claimed only two deaths worldwide have been attributed to cannabis, while alcohol and tobacco use together kill an estimated 150,000 people in Britain alone.
"Many of the harms associated with cannabis use are the result of prohibition itself, particularly the social harms arising from arrest and imprisonment," it said.
"It is only through a regulated market that we can better protect young people from the ever more potent forms of dope," it added.
The decision to reclassify cannabis upwards into the more punitive Class B category -- which includes amphetamines -- is a U-turn for the Labour government.
Cannabis was downgraded from Class B when Tony Blair was prime minister, but Gordon Brown announced a review of its status soon after taking over in June last year.
An earlier review of the cannabis classification, at the time of the last 2005 general election, resulted in it remaining Class C.
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