The government said it went against its advisors to upgrade the drug because of worries of its affect on mental health.
Magistrates welcomed the reclassification but said planned fines for possessing small amounts undermined the more serious classification.
They said it sent the signal cannabis is not as bad as other Class B drugs.
Plans to introduce a "three strikes" system for cannabis possession start with a warning, then an £80 spot fine for a second offence.
Only when a third offence is committed, will the person be liable to arrest and prosecution.
Penalties for drug offences
The spot fine proposal is due for further consultation after magistrates expressed concerns about taking offences away from the courts system.
The Magistrates' Association argued that some of the offences were too serious to be dealt with out of court and that penalty payment rates were low.
The fines are to be debated in the Lords on Monday and are expected to come into force on Wednesday.
Currently, police can only warn or prosecute people caught in possession of cannabis.
The maximum prison term for possessing cannabis rises from two to five years with its reclassification.
Home Office minister Alan Campbell said: "Cannabis is a harmful drug and while fewer people are taking it than before, it poses a real risk to the health of those who do use it."
He added: "We are reclassifying cannabis to protect the public and future generations."
But John Fassenfelt, deputy chair of the Magistrates' Association, said the fine system would send out mixed messages.
"What is that telling the youngster on the street?" he said.
"Is it telling them well, you can have cannabis, it's not so serious as other Class B drugs.
"It's a dual justice system. If you smoke or take another Class B drug you'll be brought to court, if you take cannabis you'll be given a fine. Where's the justice in that?"
A £2.2m TV, radio and internet campaign will launch next month to warn young people about the dangers of using the drug.
'Three times stronger'
Home Secretary Jacqui Smith decided to reclassify cannabis despite an Advisory Council on the Misuse of Drugs' review - commissioned by Gordon Brown - saying it should remain Class C.
Ms Smith said stronger "skunk" varieties account for 80% of the cannabis seized on the streets, and that the drug is nearly three times stronger than in 1995.
Liberal Democrat home affairs spokesman Chris Huhne said: "The move to Class B has got nothing to do with public health and education and everything to do with posturing on penalties.
"This farce would have been avoided had ministers heeded the advice of the experts on the Advisory Council on the Misuse of Drugs."
The advisory council's report, Cannabis: Classification and Public Health, described the drug as a "significant public health issue".
But it said it should still remain a Class C drug, saying the risks were not as serious as those of Class B substances such as amphetamines and barbiturates.
Class C includes substances such as tranquilisers, some painkillers, GHB (so-called "liquid ecstasy") and ketamine. Possession of Class C drugs is treated largely as a non-arrestable offence.
The Conservatives have said the government's reversal of its earlier decision showed the downgrading of cannabis had been a mistake.
PENALTIES FOR DRUG DEALING AND POSSESSION
Drug class Type of drug Possession Dealing
Class A Ecstasy, LSD, heroin, cocaine, crack, magic mushrooms, amphetamines (if prepared for injection). Up to seven years in prison or an unlimited fine or both. Up to life in prison or an unlimited fine or both.
Class B Cannabis, amphetamines, Methylphenidate (Ritalin), Pholcodine. Up to five years in prison or an unlimited fine or both. Up to 14 years in prison or an unlimited fine or both.
Class C Tranquilisers, some painkillers, Gamma hydroxybutyrate (GHB), Ketamine. Up to two years in prison or an unlimited fine or both. Up to 14 years in prison or an unlimited fine or both
Source: http://news.bbc.co.uk/2/hi/uk_news/politics/7850342.stm
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