Yes you can use a SAN
Thank you for the post.
"Can databases be stored on a SAN and then hosted or is it required that they be stored locally on the server?"
While Evan Rawson is correct that this is possible, there is a big difference in what is possible and what is a best practice. The recommendation would be to host files that are stored locally on the server; otherwise, the likelihood of corrupting the database files is greatly increased.
I am not sure about a SAN, but I have stored them on a NAS, with no problems.