Yes it is. In fact one of the local comedians in Hawaii, Frank De Lima, primarily uses ethnic (Not racial or sexist, but it's in the general area) jokes for his comedy, and even though they are often stereotyping and possibly offensive, it is very obviously in jest and literally no one, even the parties being addressed, are offended and often find it funny. Of course, someone eventually has to be offended, and IIRC it did happen.
http://en.wikipedia.org/wiki/Frank_De_Lima
You might not get a good amount of jokes or even understand some of the language (Pidgin English) if you are not familiar with the culture in Hawaii or the atmosphere. He often makes jokes, usually in the form of songs, on local events or happenings. These usually aren't ethnicity-related though.