Prep the Sugar: In a large mixing bowl, sift 3¾ cups of powdered sugar to ensure it's lump-free. Set aside a small amount for dusting your workspace later.
Make the Dough Base: Add the sweetened condensed milk and peppermint extract to the sifted powdered sugar. Stir slowly with a spatula or spoon until a sticky dough begins to form. Gently knead it by hand until it's smooth and pliable, like playdough. If it feels too wet, add a tablespoon of powdered sugar; if too dry, add a tiny bit more condensed milk.
Color the Dough: Divide the dough into three equal portions. Leave one portion plain white. Using a few drops of gel food coloring, knead red into the second portion and green into the third until the colors are vibrant and evenly mixed.
Roll and Twist: Lightly dust your clean countertop with powdered sugar. Roll each colored dough portion into a long, thin rope, about ½ inch thick. Place the red, green, and white ropes side by side and gently twist them together to create a beautiful candy-cane swirl effect.
Shape the Mints: Using a sharp knife, cut the twisted dough rope into 2-inch segments. You can roll these pieces into small balls or gently flatten them into disc shapes.
Coat and Dry: Roll each shaped mint in granulated sugar until completely coated. Arrange the coated mints on a baking sheet lined with parchment paper. Let them dry at room temperature for several hours or overnight until they are firm to the touch. Once dry, they'll have a delightful crisp exterior and a soft, creamy center!