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For the Hot Chocolate, place milk and granulated sugar in medium saucepan. Bring to simmer on medium heat, stirring to dissolve sugar.
Remove from heat. Stir in chocolate with wire whisk until melted. Stir in food color and vanilla. Pour into serving cups. Serve with marshmallows and Vanilla Whipped Cream, if desired.
For the Vanilla Whipped Cream, beat heavy cream, confectioners’ sugar and vanilla in medium bowl with electric mixer on high speed until stiff peaks form.