Cedar has issues with tannins. These are colours that occur in things like wood, fruit, vegetables, etc. Like the tannins in grape skins (that's how you make red wine), the tannins in cedar have a LONG HISTORY of leeching through white wash. The appearance can be only slightly off-putting (strong pink tinge but over all not bad in appearance) to very upsetting (splotchy, runny, streaks of red, orange or yellow).
When looking at applying paint over cedar, you need to seal it first. There are sealants that are applied to cedar (and a few other woods like white oak) that prevent this tannin pull. You then apply the white wash over top. You will still see plenty of colour behind the white wash, but it won't be as bad as without it.
For this reason, many people will decide to stain or paint cedar - and forgo the white washing. And yes, a full sand is normally required. You need to sand off the old clear coat, prime/seal (depending on whether or not you paint or white wash) and then apply the final finish over top.
You might also look at chalk paint to see if you can achieve the finish you want with decidedly few steps/work. You would have to research the tannin pull with this type of paint. It may still have issues.
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whitewash ceiling
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