I'm of two minds about this: We could either make it an amicable separation and let them go, with a lot of provisos (1) they accept a share of the Federal deficit, half divided in proportion to GDP, half divided in proportion to population, (2) all counties in California bordering other states hold plebiscites on whether to secede with California or secede from California to join the neighboring state and remain in the US and are allowd to implement the result, (3) we get 99 year leases all military facilities DoD wants to keep in California, (4) California's currency is pegged to the US dollar for five years before being allowed to float, and (5) California pays to relocate any US citizens who wish to leave seceded California to move to the remaining United States (and we can be nice and reciprocate and pay for any US citizens who want to move to seceded California to move there), after which residents of California cease to be US citizens and become citizens of California. Or, once they secede, we could invade and apply radical reconstruction.