To clean and prep the squid, remove the ink sac, eyes, head and beak and discard.Chop the squid and set aside.
Clean the luau leaves by cutting off the end of the stalk and running under cold water to wash away any dirt.
Put luau leaves in a large stock pot and fill with water to cover. Blanch for 30 minutes, then drain, rinse and set aside.
Melt the butter in a medium pot. Add the onion, garlic and squid and sauté for 5 minutes.Chop the luau leaves and add them to the pot along with the coconut milk, sugar, water, salt and pepper and simmer for 2 to 3 hours.
Adjust seasoning to taste and enjoy with hot rice and an ice cold beer.