Green’s Dictionary of Slang

1. (US) a soft, weak person, or thing.

1935		A. Woollcott Letters 19 Dec. (1944) 156: It is the substance of this editorial that [...] I take advantage of a nation-wide network to further the sale of soft, sentimental works. ‘Marshmallows’ was the term employed .
1958		E. Dundy Dud Avocado (1960) 108: Lee thought Saroyan was a marshmallow.
1969		N. Cohn Awopbop. (1970) 206: Their basic routine was to take ethnic material and castrate it, swamp it in marshmallow.
1988		M. Atwood Cat’s Eye (1989) 235: I have developed a searing contempt for gushiness and schmaltz. Frank Sinatra is the Singing Marshmallow.

2. (US black) a white person.

1962		P. Crump Burn, Killer, Burn! 388: All you marshmallows have one friend who’s a gingersnap.
1969		R. Levine in Harper’s Mag. Mar. 63: New businessmen joining Breadbasket are questioned by an ‘attunement’ committee to make sure they are black through and through — no Oreos, or, worse, an Oreo fronting for a ‘marshmallow’, need apply — and treat their Negro employees accordingly.

3. (drugs, also marshmallow reds) depressants, barbiturates [they soften one’s emotions].

1977		L. Young et al. Recreational Drugs.
2001		ONDCP Street Terms 14: Marshmallow reds — Depressants.