Line an 8x8-inch baking dish with parchment paper, leaving some overhang for easy removal later.
In a medium saucepan over low heat, combine the white chocolate chips and sweetened condensed milk. Stir continuously until the chocolate is completely melted and the mixture is smooth.
Remove the saucepan from heat and stir in the vanilla extract and salt. If desired, add a few drops of food coloring to achieve your preferred shade.
Gently fold in the cotton candy, being careful not to overmix. The cotton candy will start to dissolve slightly, giving the fudge a fun color and flavor.
Pour the mixture into the prepared baking dish and spread it evenly.
Refrigerate the fudge for at least 2 hours or until firm.
Once set, lift the fudge out of the dish using the parchment paper and cut it into squares.