The Justice Policy Institute reports the prison population grew by almost one-third between 2000 and 2006.
And although African-Americans make up 13 percent of the general population, they make up 40 percent of the prison population.
Activist and University of California professor Angela Davis said the system targets the poor and people of color.
"We have to prioritize education and health care," Davis said. "We have to move from a society that is not grounded in vengeance to a society that is grounded in justice."
The report also found crime-related government spending grew 54 percent between 1996 and 2005.
The California Department of Corrections said that its inmate population peaked in 2006 and has gone down since then.