Freeze kisses in a covered container for at least 1 hour. Place candy canes in a food processor; process until finely crushed.
Preheat oven to 350°. In a large bowl, cream butter and sugar until light and fluffy. Beat in egg, milk and vanilla. In another bowl, whisk flour, baking powder and salt; gradually beat into creamed mixture.
Shape into 1-in. balls; roll in crushed candy canes. Place 2 in. apart on parchment-lined baking sheets.
Bake 10-12 minutes or until bottoms are golden brown. Immediately press a kiss into center of each cookie. Remove from pans to wire racks to cool.