The informant shared this information at my request. They told me about how some people used to sell “bloody worms” in high school.
The informant said these “bloody worms” were simply gummy worms in red Kool-Aid. They were also typically in a small, plastic bag. They also mentioned that students also sold a variation called “bloody bears,” which used gummy bears instead.
They’ve never actually bought them, and is not entirely sure how or why students came to this specific combination of sweets. If they had to guess, the informant would say it might have given the food items more flavour.
I see this as an example of young people trying to make their way through life. Here, they would like to make money, so they are selling items easily accessible to them. I would guess that this folk dish came about after one takes two loved snack items, both full of sugar, and combine them into an even sugarier snack.