The laws are usually amongst the oldest ones in a state and only revised pretty infrequently if someone has a particular issue. The dead person constituency is pretty weak, so the matter doesn’t get a lot of attention. Basically once they wrote down that embalming chemicals can’t be explosive (to prevent the coffin torpedo and general miguided insanity) there hasn’t been much need to update them.

In a lot of ways the funeral industry is better than others, regulation wise. You don’t need to do business with anyone. You’re dead. It’s illegal to act as a funeral director without a license, and the regulations are entirely imposed in the director. If you’ve got a body to get rid of, you don’t have to pay a funeral director. The government will take care of it pretty quickly if no one else will.
We’ve got similar restrictions on barbers. Except for the government giving you a haircut if no one else will. They don’t particularly care if you’re hairy.

I do agree though, a lot more basic functions of society should be fundamentally provided by the public. “Doctors” would have been a better, but less funny, example above.