Born in Bad Zwischenahn, Oldenburg, Sandstede initially worked as a baker before dedicating his career to botany and lichenology.
He published extensive research on the lichen funga of Northwest Germany and the Frisian Islands, including a notable work on Cladonia in the Rabenhorst series.
Sandstede's contributions to lichenology earned him recognition from scientific societies and an honorary doctorate from the University of Münster.
Beyond his scientific work, he was active in preserving local history and folklore, contributing to the founding of the Freiland Museum and publishing on regional customs.
Sandstede's interest in nature and botany began in his youth, initially focusing on flowering plants and vascular cryptogams, and later expanding to mosses, liverworts, and lichens.
In 1931, he contributed a section on the genus Cladonia in the Rabenhorst series (Dr. L. Rabenhorst's Kryptogamen-Flora von Deutschland, Oesterreich und der Schweiz), followed by a phytogeographical study of Cladoniaceae in Die Pflanzenareale (1932–1939), edited by Hubert Winkler and Heinrich von Handel-Mazzetti.
With the introduction of Asahina's p-phenylenediamine tests in 1934 and simple microchemical methods, Sandstede applied these techniques to Vainio's system in his report "Erganzungen zu Wainio's Monographia 'Cladoniarum universalis' unter besonderer Berücksichtigung des Verhaltens der Cladonien zu Asahina's Diaminprobe" (1938).
Sandstede's exsiccata comprised 13 fascicles of 1886 species and forms, which he distributed to 50 museums, botanical institutes, and colleagues.