The exact headline is 6 characters too long

Bill is arguably the 4th most important word in the headline, I think there are better ways of shortening it.

I agree. A headline such as “California bill proposes decriminalizing psychedelics” would be much clearer.

Agreed.

“CA bill...” or “Calif. bill...” seem better.

What is the alternative confusing interpretation that the omission creates? I don't see it.

I personally thought, upon reading the headline, that it was talking about some poll of californians