‘Whiskey fungus’ is dividing a Maine resort town—and rankling alcohol giants

At a town meeting last year, Beth Downs held up photos from Tennessee and Kentucky, showing stop signs and trees covered in an ugly black mold called whiskey fungus.

“This could be York," the 61-year-old resident warned the room. “This is what happens—we know this, we’ve seen it."

For the past two years, battle lines have been drawn in this coastal town of some 13,000 people. In one camp is a family-owned business—Wiggly Bridge Distillery—which wants to age its whiskey for longer in hopes of improving its flavor. In the other are hundreds of residents worried about the implications of whiskey fungus, in which ethanol vapors turbocharge a species of fungus called Baudoinia, leaving black stains on buildings and plants.

The neighbors believe Wiggly Bridge’s expansion will cause mold similar to fungus seen near warehouses owned by whiskey giants such as Diageo, Brown-Forman and Beam Suntory in Scotland, Tennessee and Kentucky. Though the fungus has no known health effects, the residents fear it could cause property values to drop, as well as hurt tourism in a town that draws visitors to its sandy beaches, eclectic gift shops and whitewashed lighthouse, which locals affectionately call “Nubble Light."

“I don’t think vacationers want to see whiskey fungus staining as they arrive at their summer homes," said Downs, a retiree.

For their part, the Woods family who own Wiggly Bridge said it ages a small amount of whiskey and that it is being unfairly conflated with enormous distillers.

“People made it sound like we were turning the town black," said 37-year-old Amanda Woods, whose husband and father-in-law run the distillery. “For a time I felt terrible even walking into our local grocery store because I was concerned people hated us."

The spat is emblematic of battles playing out elsewhere, potentially resulting in limits on where and how distillers age their products. In Scotland, a couple is seeking damages from Diageo over fungus staining their home, which they say has been caused by the company’s nearby whiskey warehouse. A court case is scheduled for next year.

The Johnnie Walker maker disputes the couple’s claim and notes that exterior blackening exists on properties across Scotland. “Blackening is dependent on many different environmental factors and it is very difficult, if not impossible, to say that it is caused by any single environmental factor," said a spokeswoman.

In Moriah, N.Y., WhistlePig Whiskey recently agreed to powerwash residents’ homes after state environmental officials concluded that ethanol emissions from its warehouses were contributing to black fungus. The distillery said it adheres to regulations. “Vapors break down very quickly in ambient air and the distance they could potentially reach is very limited," said Ahren Wolson, WhistlePig’s director of operations.

In Tennessee, Christi Long last year sued Lincoln County for not requiring building permits from Jack Daniel’s owner Brown-Forman after black mold began appearing on the wedding venue she owned. Her complaint briefly halted some of the whiskey giant’s operations but Long—who received death threats from Jack Daniel’s supporters—has since moved away.

“We had to sell the property because it was being destroyed," she said. “You can’t have a wedding venue if everything looks dead."

A spokeswoman for Brown-Forman said the angels’ share is “just one of microflora’s many food sources." Available information indicates it isn’t harmful and can be removed through pressure washing, she added.

Fungus has been found to thrive near distilleries that make various liquors. In 2022, Diageo agreed to pay residents of St. Croix, in the U.S. Virgin Islands, more than $10 million after they said rum fungus caused by its operations had damaged their homes and fruit trees.

The industry also fears reputational damage. Last year the Scotch Whisky Association successfully lobbied the Scottish government to water down language in a report the government had commissioned on the impacts of emissions from maturing Scotch whisky.

The report’s authors eventually agreed to scrub the phrase “whisky fungus" from the report and delete a paragraph describing how damp and mold in homes could increase the risk of respiratory and other problems. The Scottish government told the authors in an email that the industry had raised “significant concerns about the whisky fungus section."

In York, yard signs for and against Wiggly Bridge dot the town’s well-manicured lawns. Barbs have been traded on Facebook and in town meetings. Downs visited the local police station to explore filing a harassment complaint after an opponent took photos of her.

Dave Razzaboni, 47 years old, knocked on doors this summer to get signatures for a petition demanding the town vote on a proposed ordinance requiring any new distillery production or aging buildings be banned within 400 feet of a residence. Razzaboni, who lives near Wiggly Bridge Distillery, said potential property buyers could be put off by the specter of whiskey fungus.

“It’s the fear of the unknown," he said.

The proposed ordinance—which also says distilleries must be located 200 feet from any lot boundary—will go before voters on Tuesday. If approved, Woods said it could cripple Wiggly Bridge’s prospects since the distillery could make no further changes to its existing facilities and would need 25 acres to build new buildings.

Founded in 2012 by a father and son both named David Woods, Wiggly Bridge for years coexisted peacefully with its neighbors. Then in 2022, the Woods family applied to build two new rickhouses so Wiggly Bridge—named for a local pedestrian suspension bridge that is said to be America’s smallest—could age its whiskey for longer.

Neighbors said they noticed black stains on the distillery and a building next door and fear an expansion could cause the fungus to spread.

Their case was bolstered by a town-commissioned University of Maine study that concluded it was “highly likely" that Wiggly Bridge was the source of “a significant cluster of whiskey fungus spores" on the distillery.

Two months later the Woods family’s application to expand was denied.

Then this past July the family put in another application. This time it asked to build just one new rickhouse, saying this wouldn’t be used to age spirits but rather to store grain and glass. The application was approved last month.

The neighbors called for the November referendum because they believe Wiggly Bridge will apply to change the rickhouse’s use so it could be used to age whiskey. “As a small business we’re not sure what the future holds but our intention is to be able to age spirits longer," said Amanda Woods.

The Woods family recently commissioned a rival study from a University of Hampshire researcher. It showed that whiskey fungus wasn’t detected within roughly a mile of the distillery, which they attribute to the relatively small volume it produces. Amanda Woods said the study shows the distillery isn’t creating whiskey fungus.

James Scott, a professor at the University of Toronto’s Dalla Lana School of Public Health and an expert on whiskey fungus, said the emphasis on the volume of whiskey made is overstated. He said small distilleries can cause whiskey fungus and that factors like the characteristics of the warehouse and the area’s climate are more important.

While distillers could tackle the problem by installing thermal oxidizers, these are very expensive, said Scott. WhistlePig’s Wolfson also said natural ventilation is crucial to the whiskey aging process.

In the run-up to the York referendum, both sides have dug in.

In September, Wiggly Bridge threw a party at its distillery, telling guests why voting for the proposed ordinance would harm small businesses.

The neighbors on the other side of the issue lobbied parents who brought children trick or treating on Halloween to vote in favor of the ordinance.

Perhaps the only silver lining from the episode is an unexpected camaraderie, said Marilyn Zotos, a 65-year-old retired schoolteacher who opposes Wiggly Bridge’s expansion. “This has brought together so many neighbors that didn’t really know each other," she said.

Write to Saabira Chaudhuri at Saabira.Chaudhuri@wsj.com