It counts as income to the Feds, and is reduced for CA.

"These grants are taxable for Federal. Any expenses paid with this grant are deductible. These grants are not taxable for California."

https://gpwcpas.com/grant-credit-loan-and-other-relief-comparison-chart/

That article has a table that has been updated for the recent SB, even though they didn't change their date at the top.