I used clear redwood to trim out a skylight and  it got wet before I could
seal it. Is there any way to get rid of the water stains?

Paint??

I would like to use a clear varnish so I would need to get rid of the
water stains before I varnish it. Sanding does not seem to work.

Hi keithf,
Well, I would say the stain is probable from the debris that was
desolved in the water and you wish to get that dirt out of the surface
of the wood.  If this happened to me, I think that I would try to
sponge out the dirt with an absorbing cloth wet with water, bleach or
ammonia or a combination of.  If this didn't work I would just try to
smear the dirt around to get a uniform color and no one would be the
wiser.  If you have some leftover pieces of the wood you probable
would like to try this on them first.

Regards and good luck,