I don't know what states you consider smart, but Texas is generally the polar opposite of California and they have laws on price gouging too. They just don't put a percentage on it and instead prevent "exorbitant or excessive" pricing.

If I'm considering a pricing strategy for my business, want to stay on the good side of the law, and am given a choice between a set percentage and two vague words in which there is no exact definition, give me California's stupidity any day.