If at all possible do not drill the frame. There are countless other optoins open to you. Check this thread which covers the Jaguar and other cruiser style frames with a large downtube that must be addesssed when installing a motor > http://motorbicycling.com/f30/motori...olved-307.html
I think you'll be impressed with the ingenuity displayed by other cruiser owners.
I can't help you with California laws but there are a number of Cali members who will speak up. Just be patient.