I found a company in China that sells Replica handbags that have the Designer's name, fabric print and tags. Is it legal to sell these on a website as long as you state it's Fake and is a Replica Handbag? I live in California.
No this is not legal. It's trademark infringement, and it's arguably worse than innocent infringement since you're admitting these bags are fakes but are still trading the fame of the owner's mark and trade dress.
Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.