Make the Cookies: In a bowl of a stand mixer OR using a large bowl with a hand mixer, cream the sugar and butter until it is very light in color, about 5-10 minutes.
Add the egg and extract(s) and mix until well combined.
Next, add 1 cup of the flour, the salt and baking powder and turn on low. Add the remaining flour and mix until the dough is no longer crumbly and starts to stick together, possibly cleaning the sides of the bowl.
Preheat the oven to 375F. Line a cookie sheet with parchment paper.
Divide the dough into two equal pieces.
On a silpat mat OR on a counter lined with parchment paper, add 8 drops of food coloring to one piece of dough and knead until the color is evenly distributed, about 5 minutes.
Using a cookie scoop, or eyeballing it, divide each color of dough into 16 pieces.
Take one piece of white dough and roll it into a rope about 5 inches long. Repeat with a piece of red dough.
Wrap the white rope and red rope together around each other and place on the prepared cookie sheet. Curve the top in a candy cane shape.
Repeat this process with the remaining pieces of dough.
Bake in the oven for 7 minutes, and then rotate the pan. Bake for another 2-3 minutes, just until the edges start to turn light brown. Remove the pan and place on a wire rack to cool.
While the cookies are baking, prepare the topping.
Make the Topping: Place candy canes and sugar in a food processor or blender and pulse until the candy is broken into small pieces.
Pinch the topping with your fingers and sprinkle on the cookies immediately after you pull them from the oven.
Let the cookies cool completely at room temperature for at least 2 hours before stacking.
Store cookies in a container with a lid for up to one week.