Can capital losses be used to offset capital gains for California state taxes?

Yes, you can offset capital gains with capital losses in California. So in your scenario ($10k capital gains, $8k capital losses) you would only add $2k to your California taxable income.

California starts with federal adjusted gross income (AGI) and makes adjustments. So in general, most deductions you can take at the federal level will transfer to California. There are a few situations where your capital gains and losses would be different in California, which you can read about on the instructions for California's Schedule D. One involves capital loss carryovers, but only when you change state residency.