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Lawmakers Debate Taxing Pot; IRS under Fire for Lavish Spending; Fort Hood Suspect Works on Own Defense; BMI to Bars -- Pay Up

Aired June 05, 2013 - 10:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CAROL COSTELLO, CNN ANCHOR: Wow. Well you know many Congress people aren't so much in favor of legalizing marijuana. Don't you have a tough road ahead?

KEVIN FISHER, CO-OWNER, ROCKY MOUNTAIN REMEDIES: We do. And we certainly want to do our part, we want to contribute. We want to create jobs. We want to bring in sales tax revenue. And we want to bring in income tax revenue. But a misapplication of tax code is not something we're in favor of.

COSTELLO: Well you know throughout history, cigarettes and alcohol for example have -- have faced much higher tax rates than other products. So why should lawmakers go easy on recreational marijuana especially in light of what I just said when they really are -- most of them are not in favor of legalizing marijuana.

FISHER: Sure, sure. And in Colorado, for example, it will have to go to the voters because of a (inaudible) law. But we do have a fairly high excise tax of 15 percent that's going to be levied upon recreational cannabis as well as a special sales tax of 10 percent.

If we go down the road of over taxation at the -- at the expense of eliminating the black market, I think overall we're going to be looking at a negative situation.

COSTELLO: Well according to the Colorado Future Center recreational pot use is supposedly a $600 million industry that could generate more than $130 million in state taxes next year. Would you say it's about, is that 20 percent or is that the percentage that you just gave me for the state?

FISHER: That's around there. Well it depends. We also have local taxes in the state of Colorado.

(CROSSTALK)

COSTELLO: But that sounds fair to me.

FISHER: Oh it's definitely fair. And we're not here to argue sales taxes or anything like that. We're here to discuss the misapplication of 280-e to the income tax side of the issue.

COSTELLO: Well it's just interesting that you are in Washington and you are lobbying when so many things still need to be worked out as far as selling marijuana for recreational purposes.

FISHER: I do agree. And we're working diligently, especially in Colorado. If you look at the statutes we've passed top to bottom, seed the sale tracking. Everything we're doing is protecting the consumer and the country.

But if we're going to move down this road and public sentiment shows that people do largely support medical marijuana and we even now see a majority support for recreational cannabis. We're going to have to do this in a way that you do any other business. We're going to create jobs. We're going to pay taxes but we don't need to unduly tax these legal businesses.

COSTELLO: Kevin Fisher of Rocky Mountain Remedies thanks so much for joining us this morning.

FISHER: Thank you for your time Carol.

COSTELLO: You're welcome.

First it was dance videos now swag bags. We're taking a look at lavish spending by the IRS all done on your dime. That's next in the NEWSROOM.

(COMMERCIAL BREAK)

COSTELLO: It's 35 minutes past the hour. It's time to check our "Top Stories".

The second levee along the flow of Missouri River has failed and now flood waters are creeping up to people's homes the river is nearly 9- feet over its banks. Authorities have forced people who live in 43 homes in West Alton Missouri to evacuate.

Gallup says it has identified the flawed method that led to its incorrect prediction that Mitt Romney would win the 2012 presidential election. The firm says it underwent a far reaching review of its operation but is still working on how to better identify likely voters going forward.

And Domino's is having some fun check out its new pizza delivery method, using drones instead of drivers. The franchise in the U.K. posted video of an unmanned drone actually delivering two pizza's in heat wave bags.

Oh but you won't see this in the United States any time soon. Federal rules ban any type of unmanned aircraft for commercial purposes.

The Internal Revenue Service, the IRS under fire for what's been called lavish spending as in using your money for lavish stuff. Chief congressional correspondent Dana Bash is following that story from Washington and I guess first it was dance videos then -- now there's more.

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: There is more. And part of what is so stunning about all this is it happened at the very same time. The IRS says it didn't have the resources to deal with the influx of Tea Party applications for tax exempt status. And the way the IRS wasted taxpayer dollars is mind blowing.

(BEGIN VIDEO CLIP)

BASH (voice over): Paintings of Albert Einstein, Michael Jordan, Abraham Lincoln and even Bono from U2 all made on sight at an IRS conference by an artist hired to perform "Leadership through Art" and paid $17,000 -- taxpayer dollars.

It's just one example of IRS excess. Detailed in this new inspector general report which zeros in on a 2010 IRS conference in Anaheim, California which cost taxpayers a whopping $4 million. Nearly 2,700 IRS employees stayed at three hotels with no attempt to negotiate lower rates. Why? The IRS hired outside organizers with no incentive to bargain because they got a five percent commission from hotels. In fact two event organizers got paid $56,500 by Uncle Sam from this one conference.

REP. DARRELL ISSA (R), CHAIRMAN, HOUSE OVERSIGHT & GOVERNMENT REFORM COMMITTEE: They didn't negotiate. They didn't bid it. This was 2,700 folks. So they could have gotten a considerable reduction. Instead what they said is we'll pay full boat but we wanted some perks.

BASH: Those perks included 24 tickets to Los Angeles Angel's games, free drinks and upgrades like this lavish presidential suite. An IRS division head stayed here.

(on camera): The IRS even made swags for its employees to take home. Like this tote bag with a special logo made just for the conference. This back was made in China, by the way, so was this leather folio. They also got notebooks like this even bottle openers, all of these gifts and trinkets added up to $64,000 taxpayer dollars.

But what may be just as outrageous as wasting this money is the fact that the IRS did not appear to follow the very rules it requires each and every taxpayer to follow.

UNIDENTIFIED MALE: Attempting to modulate the frequency now.

UNIDENTIFIED MALE: Sorry about the uniforms captain. The dry cleaner gave me the wrong order.

BASH: For example this "Star Trek" spoof, the inspector general said this and other videos made for the conference cost $50,187 but the IG says no one knows if that cost is accurate because the IRS the agency that requires taxpayers to keep receipts did not save its own documents to show what it spent.

The new acting IRS Commissioner Danny Werfel calls this wasteful spending inappropriate and stresses they have already reduced the cost and size of IRS conferences. One conference work shop should have helped, it was entitled "Political savvy, how not to shoot yourself in the foot."

(END VIDEO CLIP)

BASH: And here's the kicker to all this IRS employees in charge of planning this conference, wasting taxpayer money they were given reward for organizing the event. And Carol the rewards total $6,000.

COSTELLO: It's just hard, you know what else is hard to fathom that there are companies out there that do this sort of thing. Like the -- the company that did the art thing and convinced anybody to pay $17,000 for that.

BASH: I know. You know and they claimed, they got into detail of this in the inspector general report saying that they really felt that this -- this particular artist had some -- had credentials and was able to really change the way employees at other places felt about "Leadership through Art."

And the other thing I should tell you is that a few of the IRS employees actually got to take home those paintings.

COSTELLO: Oh, that's just amazing. Dana Bash, thanks so much for being with us this morning. We appreciate it.

BASH: Thank you.

COSTELLO: Four years after the deadly shooting inside Ft. Hood Army Major Nidal Hasan, the suspect, could soon stand trial. But guess what, he gets to act as his own attorney. And his line of defense? He did it to protect the Taliban. We'll be right back.

(COMMERCIAL BREAK)

COSTELLO: Jury selection was supposed to begin today in the trial of Army -- of an Army major accused of killing 13 people at Ft. Hood. Now, that won't happen until at least next week, if not later as Major Nidal Hasan has successfully won the fight to be his own lawyer.

As for his defense, Hasan will argue he opened fire that day to protect Taliban leaders. That line of defense is complicated. So a military judge might delay the start of the trial even further to give get Hasan time to prepare his argument. As his own attorney, Hasan could question the very witnesses and victims he's accused of shooting.

Sergeant Alonzo Lunsford is one of those victims he joins me now. Good morning.

SGT. ALONZO LUNSFORD, SHOOTING VICTIM: Good morning, Ma'am.

COSTELLO: Thank you so much for being with us. You were allegedly shot by Nidal Hasan in 2009. Can you tell us what happened?

LUNSFORD: Yes, Ma'am. 2009, 5 November, I was replacing one of my soldiers at the front of the building and that's when Major Hasan walked in front of me and he jumped up on the counter and yelled "Allah Akbar" and he started firing on innocent soldiers -- defenseless soldiers that day. COSTELLO: How many times were you shot?

LUNSFORD: Seven.

COSTELLO: And you must still suffer from your injuries today?

LUNSFORD: Absolutely. I do.

COSTELLO: Can you tell us how it affects you today?

LUNSFORD: Yes, Ma'am. I suffer from TBI, which is traumatic brain injury; PTSD, post-traumatic stress disorder. I still have a bullet that is in my back. I lost half of my intestines due to surgery and trauma of the bullet. And they did a barrel on my colon. I have mobility issues, anger issues, and, oh, I'm blind in my left eye. I lost vision in my left eye. I had reconstructive surgery to the left side of my face.

COSTELLO: So it's been nearly four years since you were shot. You still are suffering from your injury. Nidal Hasan has still not been tried and there seems to be so many hurdles. One, Nidal's own injuries; two his religion, he fought and won to keep his beard; and now he will represent himself in a military court. From your perspective, is that justice?

LUNSFORD: No, Ma'am. That's what I classify as an excuse which is tool of incompetence. Those who build monuments of nothingness should specialize in anything that they say or do.

COSTELLO: Why do you think the military judges in this instance are making these decisions?

LUNSFORD: Well, you know, I really don't blame the judge because, you know, Col. Osborne, she has a job she has to do and in doing her job, she cannot allow her personal feelings to come into bear.

With Major Hasan, he's a very intelligent man, so he's using our justice system as a mockery. And he has an underlying message that he's trying to convey to followers that are jihadists like he is. And so he's going to use the trial as a platform to send underlying messages. He is also going to use the trial as a platform to try to trigger certain reactions from us stemming from PTSD and TBI.

COSTELLO: You know, as I told our viewers just a short time ago, Hasan said in court he thought he was protecting the Taliban leadership when he opened fire that day. When you hear something like that, I mean what do you think of that kind of defense?

LUNSFORD: That's very preposterous. And it's ludicrous. Because he is an army major that is a psychiatrist. He is a noncombatant. So typically the weapon if he were to deploy in theater, whether you have one inside is only for self-defense purposes.

So bear in mind that when he raised his right hand to take the oath to join the military when he was an enlisted soldier and also when he became an officer core, he swore allegiance to the United States of America first. So for him to openly say that he was defending the Taliban, then he just basically self proclaimed himself as a terrorist.

COSTELLO: The judge is giving him more time to develop this argument. And as you just said, you are afraid that Hasan will use his words in court to send secret messages to enemies of the United States?

LUNSFORD: Absolutely. Because it's going to be a time during his dialogue with us in the courtroom where in his dialogue, he is going to speak a language or use a certain phrase that really doesn't make sense. So what you have to realize is why he's making those statement that there is always an underlying method to what he is saying. There is a method to his madness.

COSTELLO: All right. Sergeant Alonzo Lunsford, thank you so much for being with us. We appreciate it.

LUNSFORD: You are welcome, Ma'am.

COSTELLO: We'll be right back.

(COMMERCIAL BREAK)

COSTELLO: Free bird may not be so free at your local bar. Say it isn't so. A.J. Hammer, what's up with this?

A.J. HAMMER, HLN HOST: Well, there are some lawsuits going on Carol, which basically boil down to copyright cases. Now, while we don't have the specifics about these particular lawsuits, what I'm about to tell you about not all that uncommon. In fact, by some estimates, there are more than 400 of these kinds of lawsuits filed across the country against eating and drinking establishments every year.

This is the law. If you are listening to music in a bar, in a restaurant, performer, songwriters, and yes, even the music labels are entitled to some sort of payment when you use their music. You're supposed to have a license to play music in a bar or restaurant or retail establishment basically in any commercial enterprise.

And while I'm sure a lot of places don't pay these fees, more establishments than you realize are paying to play music. In fact, next time you are out at a place with, I don't know -- maybe juke box. Check out the actual machine because there is supposed to be a certificate there. You have organizations like ASCAP and BMI selling licenses to play the music publicly. And they're the ones who are suing on behalf of the artists when the copyright laws are being violated. So you don't have the Rolling Stones suing your local bar.

It's an organization like BMI. Now it's unclear what the probability is that anyone is going to have to pay out a massive fine for not having a license. But these lawsuits are really out there to make the point that you need to have one and according to what I have been able find out this morning from a license from BMI, for instance, a license from them costs around $700 a year.

Carol you don't need a license to play your music at home, though. You already paid these fees when you bought it legally. So are you all set; there are some exceptions to the rule.

COSTELLO: Oh good. Because I have "Free Bird" on a loop, baby.

HAMMER: Yes. I'm sure you do.

COSTELLO: A.J. Hammer, thanks so much. We'll be right back.

(COMMERCIAL BREAK)

COSTELLO: 56 minutes past the hour. It's time to check our top stories.

A U.S. Army sergeant is expected to plead guilty today to the premeditated murder of 16 Afghan civilians. Staff Sergeant's Bales is part of the deal to avoid the death penalty. Bales is accused of leaving his post last March and going on a shooting spree.

We now know of the cause of Blue Bell fire in Evergreen, Colorado. The Jefferson County Sheriff's office says power lines came into contact with a tree causing a fire to start at the bottom of the tree. About 10 acres in all have burned. Power has since been restored.

The Susan G. Komen Foundation is cancelling its three-day walk fundraiser for breast cancer research in Washington, D.C. and in six other cities next year. The group's spokeswoman says economic uncertainty and competition from other groups were factors in the decision. Participation in the group has continued to drop more than a year after a controversy involving Planned Parenthood.

And Amazon says it will start rolling out its Amazon Fresh grocery delivery service to as many as 20 urban areas by 2014; that's according to Reuters. The Amazon Fresh Service will begin in Los Angeles later this week before going on to San Francisco. Until now the service was only available in Amazon's hometown of Seattle.

Thanks for joining me today. I'm Carol Costello. CNN NEWSROOM continues after a break.

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