Begin by sifting powdered sugar into a large mixing bowl and add sweetened condensed milk and peppermint extract. Mix until a sticky dough forms, about 3-5 minutes.

If the dough is too wet, gradually incorporate additional sifted powdered sugar until manageable.

Divide dough into three portions. Color one with red and another with green gel food coloring, leaving one portion uncolored.

On a powdered-sugar-dusted surface, roll each portion into thin ropes about 1/4 inch in diameter. This should take around 10 minutes.

Twist one red and one green rope together to form a candy cane pattern. Cut into 2-inch segments and shape into rounds or discs.

Roll each peppermint in granulated sugar and lay them out on a parchment-lined baking sheet. Allow to dry at room temperature for several hours or overnight.