Here is the relevant text (State Law and the Doctrine of State, §. 147):
As is the case with every untruth, the doctrine of popular sovereignty is not even in agreement with itself, not even capable of implementation in terms of its own principle and standard. It is already an impossibility to determine the will of the people. What is to be recognized: the decisions of the chamber, the declarations of journals and associations, or the shock of insurrection? Even with the general acclamation of the primeval assembly, in view of the fact that its composition changes through death and accession to voting age up until a result is determined, the end result will no longer be the will of the now-existing people. There is further the undeniable consequence: when the popular majority is not bound to the given ruling authority and fundamental law, the minority and the individual is no longer bound to the popular majority. For then the law of majority vote is itself a sort of fundamental law. And thus it is not the will of the people but the will of each party and every individual that is sovereign. In the end, it is obscurity from the start regarding the concept of sovereignty upon which this doctrine is constructed.
For sovereignty is precisely the state power in its center, by which it in uniform manner joins, supervises, leads the functions which unfold in manifold directions; it cannot (as Rousseau asserts) be separated from government and exist apart from it, but is itself the innermost moving power of government. Therefore only a self-conscious being unified in itself can be sovereign, and therefore only a personality can be so in the fullest sense. Even the popular assembly in the republic has the capacity for sovereignty only through the artificial imitation of this unity by means of ordered forms and through a supplementation by the natural personality of the magistracy (§. 130).
But that the collective mass of individuals, thus the people, precisely apart from the unity of its constitutional order, according to which it beforehand is subject to authorities, is to be sovereign, is factually impossible. This is why with the doctrine of popular sovereignty one understands sovereignty not as a power in the state organism, which is what the concept truly is, but a power apart from and over the state organism. Thus also not a power restricted by law, which is what sovereignty always is (§§. 74, 75) but a completely unrestricted arbitrary power. The people is not to be sovereign, i.e., state power, but a power over the sovereign or the state power and over the laws of the state, authorized to dismiss the state power at any moment and appoint another, to abolish the law and issue another. Popular sovereignty thus is a power of the people not to rule the state but continually to eliminate the state and constitute it afresh. And herein lies the self-deception of the originators and the proponents of this doctrine, that they opine that the people can exercise an absolute power accruing to it apart from and over the state order, which yet is something ordered; for from whence are order and law to come to it, in that its essence is not to be bound to order and law?
Popular sovereignty is the denial of order not merely in factual consequences but already in the concept itself. With it one does not proclaim, as he fancies he does, another relation of rulership in the state, but the abolition of the state, societal chaos.
At its deepest level, the doctrine of popular sovereignty is precisely the reversal of the ethical world-order. In that the people subject themselves to no order and personal authority as something given over them, the human will is the lord of the ethical world rather than an obedient member thereof.