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Slice of Life is not built on Drama. In fact I would even go so far as to say slice of life represents a status quo, whereas drama fundamentally represents change and action. Consequently, yes they are mutually exclusive (though, much the same as any genre theory, the lines can be blurred).
That being said, besides the semi-realistic nature of the characters (teen girls doing teen things), the events are clearly not ordinary (just how often do you think children are abandoned due to debt?), and the consequences that result attempt to break the status quo the characters live in. So, no, Hanasaku Iroha is not a Slice of Life story...at least for me; it may contain certain element (partial setting, certain dialogue, etc), but the story is clearly dramatic (a young girl wishing to change) with hints of comedy and potential hints of romance.
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