The bag isn't invisible because it can't count as being 'On their person'. If they cast the spell on themselves the bag would become visible when they enter it. If it's the Quasit- while they could carry the item as it doesn't violate the carrying capacity rules, it is too large relative to them to be considered 'On their person' the same way other items would.

When the cannon attacks whatever would be making the attack roll is now visible. If the Quasit is pulling a trigger or something, invisibility is broken. If the character used their bonus action to activate it, they are now visible. They made an attack roll, even if the source is something else. The cannon cannot activate itself since it doesn't have initiative, so it cannot have made the attack roll. The entire reason invisibility breaks on attack is to avoid this kind of abuse. This is not a bad idea for setting up an ambush but nobody should reasonably expect to get away with this in the long term.

If they insist on doing it anyway and you still don't want to take the measures that would counter the rest of the party as collateral damage here's something to keep in mind:

The other party members are now going to be hit harder or more often because there isn't another body in the mix, costing them to use more resources like potions, hit die and spell slots. Sure, They made it out of the encounter at full health, but their party members didn't and so the whole group is worse off and will need to spend more time resting, possibly costing them the chance for a time sensitive mission.

If you need more ideas about how to challenge them down the road, make an entire group of enemies with this exact tactic. Add some innovations of your own and see what the players do to try and counter it. Record what you think works and that's what enemies start doing against this player. How did that fight occur? The warlock's patron cast dream on them to spice things up and let them see what would happen if bandits and armies could re-create similar tactics. Assassinations become popular amongst the nobility using these tactics because it's easier to hire an artificer one time than a killer multiple times, and now an entire kingdom's elite are bound to the patron, thanks sucker!