Starting from a formulation of Correlated Worldline (CWL) theory in terms of functional integrals over paths, we define quantum states in this theory. We first define states in both conventional quantum mechanics and quantum gravity in terms of paths, and then go on to do the same for CWL theory. We show that the most natural formulation of CWL theory involves a rescaling of the generating functional for the theory; correlation functions simplify, and there is a remarkable simplification in the structure of perturbative expansions. The spacetime metric obeys the Einstein equation, sourced by all of the CWL paths. The matter paths are correlated by gravitation, and show 'path-bunching', thereby violating quantum mechanics for large masses. For smaller masses, we exhibit the structure of low-order perturbation theory for the matter propagator, both for a single particle and for a scalar field. For the example of a two-path experiment, we show how the results compare with conventional quantum theory.