In a medium saucepan, pour in 2 cups of whole milk and 1 cup of heavy cream. Place the saucepan over medium-low heat and gently warm the mixture, stirring occasionally, for about 5 minutes, until it's heated but not boiling.

Once the milk and cream mixture is warm, add ½ cup each of semi-sweet and white chocolate chips. Continue to stir the mixture consistently for about 2-3 minutes, until the chocolates are completely melted and the blend is smooth and velvety.

Stir in ¼ cup of granulated sugar, along with ½ teaspoon of vanilla extract and ¼ teaspoon of peppermint extract. Mix these ingredients well for another minute until the sugar is fully dissolved.

To achieve that signature Grinch green color, add a few drops of green food coloring to the chocolate mix. Stir thoroughly for about 30 seconds until the color is evenly distributed throughout the hot chocolate.

Remove the saucepan from the heat. Adjust sweetness or color by adding more sugar or green food coloring as needed, stirring well to achieve desired taste.

Carefully pour the warm Grinch Hot Chocolate into mugs, filling them about three-quarters full.

Generously dollop whipped cream on top of the hot chocolate.

Sprinkle crushed candy canes over the whipped cream layer for added festive touch.

Add mini marshmallows on top for extra fun.