The first incision is made at the woman's throat, a 60mm scalpel plunging into the soft flesh below her chin before slicing through muscle and viscera. Within seconds, only the spine connects head to torso, and the scalpel is exchanged for an osteotome — a chisel that splits bone.

The edge of the osteotome is inserted into the wound and held firmly against the woman's vertebrae. It takes 33 compact swings of a mallet, a sharp thwack! bouncing off the bare walls and floors every time it connects, to sever the spine. The woman's head is then gingerly lifted away.

The arms come off next. First the left, then the right, both sliced off the torso at the shoulder joint. Blood pools on the stainless steel table, flowing slowly toward a drain near the feet of the cadaver. The two technicians, dressed in blue scrubs and masks that reveal only their eyes, sew up the wounds, hose off excess blood and tissue, and wrap the woman's body in absorbent chux and thick plastic. Her head is wrapped separately.

The 30-minute process, called a procurement, takes place at Research for Life, a body donation company based in Phoenix. VICE founder Shane Smith was there, watching it happen:

The donor's head and torso will be used for research and medical education; her arms will be cremated, and the cremains (the ashes) will be returned to her family. But bodies "donated to science" aren't always handled with such care. While the US Department of Health and Human Services regulates most organ and tissue intended for transplants, tissue donated in the US for research and medical education is all but unregulated by the government.

This has led to problems. Some are arguably a matter of misunderstandings — people donate their bodies assuming they'll be used for medical research, only for their families to discover the bodies were used to crash-test vehicles or for military ballistics testing. Other problems, however, enter the realm of the sinister, from coroners secretly selling the tissue of murder victims, to the tissue of people with HIV being passed off to medical educators as healthy, to crematoria operators cutting off and selling body parts of corpses they were meant to be cremating.

"If the industry cannot raise the standard of professionalism, the public is not going to have great confidence in what the industry is about, and medicine as a whole will be harmed as a result," says Garland Shreves, the CEO and co-founder of Research for Life. "Protecting consumers is protecting the industry. We should all be regulated."

* * *

Thousands of people in the US donate their bodies for research and medical education to accredited tissue banks every year. And the demand for tissue with which to conduct that research and education is growing as medical technology advances — new equipment and procedures need to be tested, and doctors need to learn how to use that equipment and conduct those procedures.

According to the Uniform Anatomical Gift Act (UAGA), selling or purchasing human tissue is a felony. But charging a "reasonable amount for the removal, processing, preservation, quality control, storage, transportation, implantation, or disposal of a part" is permissible. Procurement centers like Research For Life, which is a for-profit company (there are also non-profit tissue banks), operate on what they refer to as a service fee–based system, charging clients — universities, hospitals, medical device companies, surgical training facilities — for the kinds of expenses delineated in the UAGA.

What exactly constitutes a "reasonable amount" of money for processing a cadaver, however, remains an open question.

Shreves believes his company is currently the second-largest tissue bank in the country, though there's currently no way to tell for certain. He says Research for Life makes an average of about $2,500 per cadaver donated and processes more than 1,000 cadavers per year, but that this does not end up being profitable. Instead, he says, the company makes its money by facilitating medical education — allowing some of those same clients that purchase tissue to rent the company's classrooms, training facilities, and high-tech medical equipment, often while utilizing the tissue.

"There are a lot of people who say we shouldn't be so transparent, and we're saying enough of that," says John Cover, COO and co-founder of Research for Life. "We want to be transparent and let people understand the industry."

Four times a year, the company offers public tours of its facilities, including the recovery area in which bodies are processed and its storage freezers. Shreves gave VICE News a tour:

The most public glimpses into the industry have tended to come in the form of grisly scandals. One of the most sensational began in December 2013, when the FBI raided a Detroit warehouse owned by a man named Arthur Rathburn; inside, the bureau found more than 1,000 body parts on ice. According to a federal indictment, Rathburn's company, International Biological Inc., procured bodies from a variety of sources, then processed them and supplied body parts to customers who used them for medical training.

None of that was necessarily illegal. However, according to the indictment, Rathburn and his wife, Elizabeth, procured bodies of people they knew had diseases like hepatitis and HIV. But they did not disclose to their customers that the tissue they were supplying was potentially infectious.

The Rathburns allegedly provided a head and neck that tested positive for Hepatitis B to a Massachusetts medical education course entitled "Advances in Periodontology." For this, court documents show the couple was paid more than $13,000. For a meeting of the American Society of Anesthesiologists, the Rathburns provided the remains of someone who had both Hepatitis B and HIV. For that they received more than $55,000.

What exactly the Rathburns invoiced their clients for is unclear in the indictment, but Shreves says the idea that they were paid that much solely for tissue is "lunacy." Instead, he says, the tissue probably made up a very small portion of those sums, the majority being for the use of medical equipment supplied by the Rathburns.

The couple also allegedly handled and stored the bodies in ways that were reminiscent of a horror movie. The indictment stated that they failed to maintain basic precautions to prevent infectious tissue from contaminating healthy tissue; Rathburn dissected bodies using a chainsaw, and stacked human heads on top of each other in freezers with frozen pools of blood and bodily fluids in them.

Rathburn and his wife were both arrested, and in January a grand jury handed down a 13-count indictment. She agreed to testify against him and filed for divorce. He is currently in jail awaiting trial.

The FBI's investigation, run out of its Detroit office after the office received a tip, is not limited to Rathburn. It encompasses several different tissue banks in Michigan, Illinois, and Arizona that "did a lot of business together," says FBI spokesperson Jill Washburn. Last October, a man named Stephen Gore pled guilty to running an illegal body donation center at the Phoenix-based Biological Resource Center, which was shut down after the FBI raided it in 2014.

The goal of the ongoing investigation, Washburn says, is to "eliminate the underground aspect of the industry, because it is actually a legitimate industry."

* * *

"There is more regulation about shipping a head of lettuce out of California than shipping a human head," Dr. Todd R. Olson, the former director of the Anatomical Donation Program at Albert Einstein College of Medicine in New York, told the Dallas Morning News in 2007. This was after a tractor trailer pulled over for speeding in Texas was found to contain about 25 human heads.

Not a whole lot has changed since then, as Shane Smith found out when he spoke to Olson:

New York, Oregon, and Florida have laws that in some way address licensing and accreditation for non-transplant tissue banks. But none of those laws allow for unannounced inspections of facilities.

More stringent government regulation was passed in one state earlier this month, however. Arizona Governor Doug Ducey signed into law a bill that requires both government licensing — from Arizona's Department of Health Services — and unannounced inspections of tissue procurement centers. Shreves says he hopes it will serve as a blueprint for other states to pass similar laws.

The law isn't as comprehensive as Shreves and Cover say they'd originally hoped when they got involved in its drafting. For instance, the original version of the bill called for university donation programs to be regulated, but the version sent to Ducey was amended to exclude university programs.

"We didn't want to penalize any of the universities, [the purpose] was mainly to sweep out bad actors," says Arizona state representative Regina Cobb, who co-sponsored the bill. "Universities are pretty rigorous on what they can and can't do at this point."

But university-affiliated body donation programs have also seen their share of scandal. In 2002, the supervisor of the willed-body program at the University of Texas Medical Branch at Galveston was found to have been running a side business selling tissue from donors — including fingernails and toenails — to outside clients.

In 2004, the University of California, Los Angeles (UCLA) suspended its donor program when it came to light that some cadavers donated to the university for medical education were instead being illegally provided to outside clients. The director of the program and an outside tissue broker, who reportedly made more than $1 million on the scheme, were both sent to prison. UCLA was forced to admit it had effectively lost hundreds of cadavers.

Just this past February, George Washington University announced that it shut down its body donation program after cadavers were so badly mismanaged that the university was unable to return cremains to families because it couldn't tell whose ashes were whose. The person in charge of the program was fired.

"Medical accreditation at university medical schools doesn't cover anything in donor programs," Shreves says. "George Washington University's medical program is a classic example that university programs have serious issues and flaws."

* * *

The American Association of Tissue Banks (AATB) is by far the biggest accrediting organization in the industry. (The American Medical Education and Research Association also accredits.) According to its website, the AATB has accredited more than 100 US tissue banks, though the vast majority of those deal with transplant tissue as opposed to tissue for research and education.

But accreditation is voluntary, and an unknown number of banks and individuals collect tissue without any affiliation with the AATB.

"The AATB operates with a list of organizations, but there can still be renegades collecting tissue," says Arthur Caplan, a professor at New York University's Langone Medical Center and founding head of its Division of Bioethics. "You really need to be sure you're going to license; if you're going to collect stuff, you have to register as a tissue procurement organization.... State health departments should show up unannounced."

The AATB's website specifically states that its accreditation program is "not regulatory... it does not tell member banks HOW to comply, but rather WHAT RESULTS are expected." It does conduct two-day inspections of its accredited tissue banks, but the inspections are scheduled ahead of time. Once accreditation is secured, it lasts for three years before another inspection is required.

"We support the [Arizona law]," says Melinda Ellsworth, vice president of donor services at Phoenix-based Science Care, believed to be the largest tissue bank in the country. "Any type of regulation for anyone entering the market is a good thing, but in our opinion the regulations through AATB are the highest available today."

The AATB would not make an official available for comment, but in a statement, the organization said that its position regarding government oversight was that "state-specific legislation requiring all non-transplant anatomical donation organizations to achieve and maintain AATB-accreditation would be beneficial to the public."

The Arizona law will allow tissue banks already accredited by the AATB to be automatically licensed, but they will still be subject to unannounced health department inspections.

"The legislation protects the public from bad players," Shreves says. "We can no longer allow people to use tools from Home Depot, or expose people to deadly pathogens.... The intent behind the gift is so worthy, we need to accept the challenge to make it the best it can be. We owe it to the donors."

Follow Ky Henderson on Twitter: @kyhenderson