Will that result in a lot of litigation? Sure. But the state has a lot of leverage on its side to push for a better result.
There has to be a way for California's current government to fix its old mistakes. The government could tax water per gallon, or impose steep property taxes on water rights. Both would solve the problem and side-step any Constitutional takings claims by farmers.
Do we really want more growth in the cities where water is scarce?
Reply to post below me : So, there is no issue. Best of luck.
Edit: My solution is for the people wanting water rights need to purchase them from those that have them (i.e. the agricultural folks).
"Buy more at market rate" means nothing if there is no water that's actually deliverable. Now that reservoirs are running dry, that's exactly what's starting to happen.