There are a bunch of complicating factors here, though.
The first is that fallowing isn't exactly equivalent to supply control. It's partially an inertial, special-interests effect, and partially an attempt to maintain high productive capacity for bad seasons - food is vital, and has a long production cycle, so funding unused capacity is a sensible hedge against bad conditions.
The second is that nature works almost as hard to kill crops as it does to keep them alive. Indoor/greenhouse farming solves the problems of insects, frost, drought, and heat at a stroke. Hydroponic farming roughly solves soil depletion (and fertilizer runoff) issues, and relocating to the northeast circumvents water shortages. That last point is particularly significant - a lot of arable land in the western US lacks the water rights needed to farm it cost-effectively.
I agree that the fundamental economics of indoor, semi-urban lettuce farming are laughable for bulk products. No one is going to outprice Iowa on corn, and I doubt lettuce - even avoiding transport costs - is cost-effective without a lot of specialty markups. My first guess is that this is "pesticide free, sustainable, locally grown lettuce" being sold out of season to people who pay extra for those traits. Even so, indoor farming does have some traits to recommend it when dealing in crops less fundamental than grain.