I have an Item that I cannot sell in California. Is there anyway I can restrict the completion of the purchase if that Item is in the cart and the Ship State equals California?

It's not a feature, but can be custom written with javascript and the idea is to check the product id's in the cart, and then the ship state, and finally change/hide the checkout button and add a message.
I don't think it's going to be possible when added to cart as you don't know where they are shipping to at that point.

You could add a (mandatory) product option that says "I am not shipping this item to California", but that will not stop it entirely.