In a small resealable plastic bag, combine the coconut, water and food coloring. Seal bag and shake until blended; set aside.
For bunny ears, cut each marshmallow in half horizontally. Cut each Laffy Taffy into small oval pieces. Press one candy piece onto the cut side of each marshmallow half; set aside.
In a microwave-safe bowl, melt candy coating; stir until smooth. Dip one cookie into candy coating. Let excess drip off and place on waxed paper. Immediately sprinkle coconut onto the bottom of cookie. Gently press jelly beans into coconut. Using kitchen scissors, cut bottom ends of marshmallow ears; press onto cookie. Add M&M's for eyes.
Repeat for remaining bunnies. Pipe pink icing for noses and whiskers. Let stand for 15 minutes or until set.