1. Beat butter and sugar at medium speed with an electric mixer until fluffy. Beat in eggs, 1 at a time. Beat in coconut extract.
2. Combine flour and next 4 ingredients; add to butter mixture alternately with coconut milk, beginning and ending with flour mixture. Beat at low speed until blended after each addition, stopping to scrape down sides of bowl as needed. Add 1 cup coconut, blending well.
3. Spoon batter into 18 muffin cups lined with muffin cup liners. Bake at 350° for 18 minutes or until toothpick inserted in center comes out with moist crumbs clinging. Remove from pan; cool completely on a wire rack.
4. Top cupcakes with Coconut-Marshmallow Buttercream Frosting. Top with remaining 2 cups coconut; drizzle with Chocolate Ganache. Garnish, if desired.