I've talked to my taxidermist about this, he said they usually send it off to a tannery.
I started tanning them myself about 10 years ago. Dry scrape tanning is pretty simple, once it's been salting for a week or two, just scrape the salt off and buff the hide with some sand paper. Then you can either make a tanning solution out of the deer's brain and hot water, or you can just use a dozen eggs (which is what I do) with no water. Rub in the eggs or brain water until it's soaked all the way through and work the hide until it's dry and no longer cool to the touch. Takes about 4 hours depending on the conditions.
To give it some color, you can set it over the smoke from a fire for a few hours (until it's as dark as you want it), and that'll make it water resistant too.
