No No No! Please do not ever sand anything and then use it on jointer, planer, table saw, or any bladed/cutting tool. The abrasives on the sand paper become embedded in the wood (or whatever) during sanding process, and will then dull any cutter, carbide or otherwise, very quickly.
If pallet wood, or any other wood that has likely been exposed to weather, dirt, grit, gravel, outdoors, etc., e.g. old fence boards, must be used in the wood shop – and yes, it is definitely frowned upon since most people don’t bother to take care – it should be thoroughly washed with a pressure/power washer until all dirt, etc is washed out.
This goes in general for trees/greenwood as well: bark needs to be stripped off or power-washed before using on band saw or anything else.