The thing is to my knowledge California is just cheaper/better because full sun and up until now you could just pull water from the ground and grow your crops.
IMO we need more urban and suburban gardens to supplement, and we'll have to just relocate some crops away from California and other drought-prone areas. Tough times ahead for some.
And as much as even I despise the suburbs, I think they're prime for retrofitting. We have a lot of land, we just need changes to zoning, a little more density, and more emphasis on the local community which can come from the former. Like why can't we all grow a few crops (nothing crazy) and just trade once/week at someone's house?
I think in the future we might see either community greenhouses, more local farming, and/or more suburban gardens and even greenhouses (HOAs permitting).
The thing is that the current model is basically export water in the form of crops from California because as you said it's much cheaper, but that low cost comes at the expense of water and the environment, a low cost to which Californian farmers are probably not bearing and certainly society in general isn't. Really we're exporting water from a arid locations to places like the Great Lakes. That's not to include transportation costs via cheap oil/energy.
It's just not sustainable long-term.
HOAs. The same entities that insure every waterway for miles is forever polluted with residential runoff.
I'd be careful to imply blame on a single state, when it is a large part of the population that relies on the output. There are certainly ways to target water waste in agriculture, but the whole nation has a stake in successful water management.
[0] https://www.cdfa.ca.gov/Statistics/