In a medium saucepan, bring sugar, ½ teaspoon salt, and water to a boil over medium-high heat.
Boil, undisturbed, until mixture is yellow in color, for about 8-12 minutes.
Remove pan from heat and slowly pour in the heavy cream. Be careful because the mixture will bubble up. Stir until smooth.
Add vanilla extract, marshmallows, and drop of red food coloring into the pan.
In a separate bowl add some of the marshmallows, add a drop of blue food coloring into the pan.
Stir until marshmallows are completely melted and the mixture is smooth.
Pour caramel mixture over popcorn and pretzels and gently stir with a rubber spatula until popcorn is well coated.
Stir in the M&M's. Transfer mixture to a large baking sheet and sprinkle with sea salt. Let cool completely.