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The NCAA can't afford to lose California. Combine all of those states and it's 25% of the population.
I don't see any way that the NCAA could seriously entertain the idea of banning all of the California schools.
It would be devastating to the Pac-12 and that alone will probably be enough to make it a non-starter.
Also, why would University Presidents ultimately want to punish California schools for complying with the law of their state? Does the University President of Duke really want to screw over Stanford like that? And Berkeley and USC and UCLA? And Pepperdine, Fresno, Irvine, etc? I have a hard time seeing that, because they could easily be in the same situation.
So my prediction is the NCAA will either prevail in a legal challenge or make a deal.