"I entered it like other 1099-G federally goes to Other income Sch 1"

But this is a Business grant program. That's not paid to an individual. It's paid to their business, even if they are a Sched C filer. If they got a grant, you create a Sched C for the year.

"and box 6 states TAXABLE GRANTS."

Exactly.

"These grants are taxable for Federal. Any expenses paid with this grant are deductible.

These grants are not taxable for California."