Unwrap all of the Hershey's Kisses so they're ready to press into the warm cookies.
For the dough
Preheat oven to 350°F. Line cookie sheet with parchment paper or silicone baking mat.
In the bowl of a stand mixer using the paddle attachment, cream 8 tablespoons unsalted butter(softened to room temperature) and 1 cup granulated sugar together on medium speed until light and fluffy, about 3 minutes. Add 2 large egg yolks, 1 teaspoon vanilla extract, and 1/2 teaspoon peppermint extract and beat until well combined for about a minute, scraping sides as needed.
In a separate bowl, combine 1 1/2 cups all purpose flour, 3/4 teaspoon baking powder, and 1/4 teaspoon salt. Mix into butter mixture until a dough forms. You may need to do the final mixing by hand as the dough will be thick.
Fold 2 tablespoons red decorating sugar into dough.
To bake and top
Roll dough into 1 tablespoon (about 18 g) balls and set about 2 inches apart on prepared baking sheet. Bake in preheated oven for 9-10 minutes and remove when set but not yet turning brown. They firm up as they cool.
Wait 2-3 minutes so that cookies have cooled a bit but are still warm and gently press a candy cane Kiss into the top of each cookie. If you do this too soon, it may melt. If you wait too long, they may not stick to the cookie. Transfer to wire cooling rack.
Notes
Store the cookies in an airtight container at room temperature. Baked cookies freeze well.