It is the biggest study to look at the impact of marijuana on psychiatric disorders.
The researchers said that "given the increasing availability of high-potency cannabis, this has important implications for public health".
"This is more evidence that the link between cannabis and psychosis matters", says Krista M. Lisdahl, a clinical neuropsychologist at the University of Wisconsin, Milwaukee, who wasn't involved in the study.
Psychosis is usually triggered by factors like genetics and the environment. The researchers compared 901 patients who were diagnosed with their first episode of psychosis to a control group of 1,237 from the same sites.
Psychosis involves a loss of contact with reality, according to the U.S. National Institute on Mental Health (NIMH).
Skunk contains more THC, or delta-9-tetrahydrocannabinol, than regular cannabis, and THC can induce psychotic symptoms such as hallucinations, delusions and paranoia. Some people might just experience a single episode of psychosis, while others live with it on a daily basis.
Dr Di Forti said even low-THC cannabis oil, used for epilepsy and MS, should come with a warning of possible mental health effects. But in Europe, the drug is roundly legalized - so that's where the research team at King's College London began.
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People who use marijuana on a daily basis may be at increased risk for developing psychosis, particularly if they use high-potency marijuana, a new study from Europe suggests. Additionally, 30 percent of new psychosis cases diagnosed in London were also associated with high strains of the drug.
Potent cannabis types with more than 10 percent of the psychoactive ingredient THC were linked to a five times greater risk.
In those cities, strong pot is widely available.
People reported the names of weed strains they used, such as skunk in the United Kingdom or the Dutch Nederwiet, which allowed the researchers to identify the THC content in each product through data gathered by the European Monitoring Center for Drugs and Drug Addiction and national data from the different countries.
"The use of cannabis with a high concentration of THC has more harmful effects on mental health than the use of weaker forms", lead author Marta Di Forti of King's College London said in a statement. "This proportion is as high as 30 percent in South London and 50 percent in Amsterdam".
The research comes after a Lancet study said cannabis is responsible for 60,000 cases of depression in young people in Britain.
Because this was an observational study, it can't prove a direct cause-and-effect link between pot and psychosis, said Suzanne Gage, a psychologist with the University of Liverpool who wrote an editorial accompanying the study.
One critique of the theory that weed contributes to psychosis risk has been that while more people are using weed worldwide, there hasn't been a corresponding rise in rates of psychosis, Gage explains.