The makeup job reminds me of the rap duo Insane Clown Posse. The file name (shaggydecapitatesmall.gif) seems to support this, since one of the rappers' names is "Shaggy 2 Dope." IMDB says he's been in a couple of straight-to-video movies. Maybe it's "Bowling Balls" or "Big Money Hustlas."
I haven't seen either movie, so I couldn't say. Colton, how did you happen to come across this GIF? The site it's hosted on, faygoluvers.net, seems to have something to do with ICP, so I imagine there's a pretty good chance it's from one of their two movies.
That GIF is like a car crash, I immediately went back and looked again.
Seriously, that thing can really screw someone's mind up for weeks if they don't know exactly what it is they are really about to see. Sure, it says 'graphic decapitation' in the topic header, but that doesn't cover it IMO.