The effects of residual cannabis use on emotional expression recognition and the P3 event-related potential in participants who scored highly for subclinical depression were investigated. Comparisons were made between participants who were classified as depressed or nondepressed cannabis users, depressed non-cannabis users and controls who neither used cannabis nor were characterized as being depressed. In an emotional expression recognition task, participants were asked to respond to faces depicting happy, angry, fearful, and neutral faces either implicitly, explicitly, or empathically. Residual cannabis use and mood was shown to modulate the P3 event related potential during the task. There was a significant reduction in the P3 amplitude between depressed and nondepressed participants. Residual cannabis use further reduced the P3 amplitude with the greatest deficits being associated with cannabis users who scored highly for subclinical depression. These effects were greatest for explicit and empathic processing of faces depicting negative emotions. We conclude from our study that cannabis and mood state interact to reduce the amplitude of the P3 which has been associated with attention to emotion.