It is not generally illegal to be friendly to children, absent some other illegal conduct. Neighbors are not generally committing crimes if they offer children a snack.
Since you are concerned, the best course of action would be to tell the neighbor that you want her to stop doing this, as you are trying to teach your children not to accept candy from anyone, for safety reasons. Then, you would want to tell your children to stay away from this woman, and all other people who offer them candy.
If the behavior continues, you could try to call the police anyway. The police have considerable discretion in whether to pursue charges against any person concerning their behavior. While it is unlikely that your neighbor is violating the criminal
statutes in California, if the police agree to talk to her about her odd behavior, it might stop.
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