Voters will not get to decide in November whether California should be split into three different states.
The California Supreme Court blocked the measure from appearing on the ballot, saying significant questions have been raised about its validity.
Venture capitalist Tim Draper is backing the measure to break up California. In June, backers said they had collected nearly 420,000 signatures to qualify the initiative for the November election.
Under Draper’s plan, San Luis Obispo, along with the rest of the Central Coast, would be looped in with Los Angeles and be known simply as "California."
The other states would include "Northern California," which would stretch from the Bay Area to Oregon, and "Southern California," would include San Diego and most of the Central Valley.
However, an environmental group, the Planning and Conservation League, says breaking up the country’s most populated state would drastically change California’s governmental structure.
Draper has said in the past it would be inappropriate for the court to block the measure from the ballot.
The initiative could appear later if the court ultimately rules in its favor.