The court ruled that the use of marijuana was "protected by a person's right of free self-development," according to a statement published on the court's website.
"The punishment for the use of marijuana contradicts... the Georgian constitution," it added.
Before the ruling, the personal use of marijuana was considered an administrative offence punishable with a fine of some US$200.
However, storing and selling marijuana remains illegal under Georgian law.
The court also said the prosecution of people for the use of marijuana was still justified when it "poses a threat to third persons" such as "in educational institutions and some public spaces".
The Georgian government has previously been criticised by rights activists over what they describe as a hard-line drug policy.
In May, thousands rallied for several days in the Georgian capital Tbilisi to protest against allegedly heavy-handed police raids in two popular nightclubs where eight suspected drug dealers were arrested.
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