Melt white chocolate using a double boiler. Make a double boiler by using a medium sized pot filling it with water, and placing it on the stove. Turn the stove on so the water boils, and then place a heat proof bowl on top of the pot with boiling water.
Turn the heat down until the water just simmers. Add the chocolate and it will melt. Once it melts remove the pot from the stove. Lay out several pretzels on a sheet of waxed paper. Spoon melted white chocolate over 2/3 of the pretzel, you want to leave one of the small portions of the pretzel uncovered.
Sprinkle red sanding sugar over the white chocolate. Place a marshmallow on the corner of the chocolate covered hat. You can cut the marshmallows carefully in half and for a smaller white portion on the hat.