PayPal founder Peter Thiel's investment firm has become the first institutional investor to pump money into the marijuana industry.

Thiel's investment firm, Founders Fund, led by partner Geoff Lewis, has acquired a minority stake in Privateer Holdings, the Seattle-based owner of – a review site for medical marijuana, which also serves as a medical marijuana grower in Canada.

Neither Founders Fund nor Privateer Holdings disclosed the terms of the agreement, but Lewis said that investing in the cannabis business "is just a slightly more extreme version of something we've shown in our other investments that we're comfortable with. We're fine with investing in businesses with regulatory ambiguity, because we believe that regulation follows public sentiment."

Chief executive of Privateer Holdings, Brendan Kennedy, said: "This is an important milestone in the transition of this industry from a state of prohibition to a state of legalisation."

Founders Fund, which is best known for investing in tech companies including Facebook, has been investigating the marijuana industry in the States for 18 months now and has reached the conclusions that Privateer Holdings is the biggest money pot for it.

Lewis said: "At this point, we don't think there is any other company in Privateer's league. They have a strong first-mover advantage, and they're in a position to build a strong brand.

"There is somewhat of a regulatory risk with this business. But I don't think it's an order of magnitude greater of regulatory risk as something like Airbnb, where when we invested a few years back, the regulatory environment was unclear and it was even illegal in many cities. [Cannabis] is obviously a more controversial space, but not dissimilar from others we've invested in."

The investment from Founders Fund is part of a $60m (£40m) funding round for Privateer Holdings, which is apparently nearly fulfilled.

Cannabis for medicinal purposes is now legal in 24 states, and a further four states have legalised it for recreational use.