Mix flour, baking powder, baking soda, and fine sea salt in a small mixing bowl. Set aside.
In a large bowl using a hand-held or stand mixer fitted with a paddle attachment, beat butter, cream cheese, granulated sugar, and brown sugar together on medium high speed until fluffy and light in color, about two minutes. Add in egg and vanilla bean paste. Beat until incorporated.
With the mixer running on low speed, slowly add in dry ingredients. Beat on low just until the flour has combined, scraping down the sides as needed. The dough will be sticky. Remove bowl from the stand mixer, and stir in 1 cup of M&M's with a silicone spatula.
Scoop cookies into 3 tablespoon balls and place on a parchment lined baking sheet. Using the remaining ½ cup of M&M's, cover the outside of each cookie dough scoop. Place in the refrigerator for 30 minutes until the dough has firmed up.
Heat oven to 350°F (175°C).
Remove cookies from the refrigerator and place 3 inches (8 centimeters) apart on a parchment lined baking sheet. Bake the cookies for 16-20 minutes until golden brown around the edges and the middle of the cookie has set. Transfer to a cooling rack to cool completely.
Store cookies in an air tight container at room temperature up to 5 days.