One of the problems with initiatives is that they're sometimes not very well worded, and -- arguably because they have not gone through the legislative process -- do not adequately address complicated procedural or substantive uncertainties.
That said, I'm not sure that even a bill through the Legislature would have expressly addressed the issue raised by this case. Proposition 36 eliminated mandatory 25-to-life sentences for nonviolent three-strikers in the future, and also gave a limited safety valve for prior nonviolent three-strikers to attempt to get out of their sentence as well. The statute doesn't say, however, which category applies to someone who's been sentenced but whose conviction is not yet final; e.g., because it was on direct appeal when the initiative became effective. This substantively matters, because the safety valve for the latter category is somewhat smaller than the rules that apply to the former.
The Court of Appeal decides that the more limited safety valve applies to people whose sentences were not yet final. As a result, Ricardo Yearwood may well find that the weed that he had in prison will indeed cost him 25 years to life.