I have tried to find a law about smoke bombs in California. I know you can buy them for a boat as a distress signal,I know kids that play airsoft use them as well. My question is, "Are smoke bombs legal in California, to make or possess?"
Without getting into specifics about what you are planning on doing, or what you have been charged with, I recommend the following link, which has all of the relevant code sections of California's fireworks law. Keep in mind that this is statewide, and that depending on where you are, there may be county and local ordinances, or even federal laws that apply.
http://osfm.fire.ca.gov/strucfireengineer/pdf/fireworks/FireworksHandbook2011.pdf