In a medium saucepan over medium heat, combine the 1 1/2 cups semisweet chocolate, 3/4 cup creamy peanut butter, 4 tablespoons salted butter, 2 tablespoons water and 1 teaspoon vanilla extract. Stir until smooth and fully combined.
Place the 8 cups chocolate chex cereal* into a large mixing bowl (larger than you think you need) and pour the chocolate mixture over the cereal. Gently toss to coat. Do not stir- the pieces will break.
Combine the 2 cups powdered sugar and 1 tablespoon Dutch process cocoa powder in a small mixing bowl, whisk together.
Put half of the powdered sugar mixture into an airtight plastic bag along with half of the tacky cereal. Shake to fully coat.
Sift out onto a rimmed baking sheet to set. Repeat with the other half of the powdered sugar mixture and cereal mix.
Allow the snack mix to set for at least 1 hour before transfering to a plastic container. gently mix with the 1/4 cup mini M&M candy.
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Notes
Don't be alarmed, but chocolate Chex mix is actually a mix of chocolate and traditional cereal. Traditional cereal can also be used.