The correct answer is 2. Artist
Step-by-step explanation:
According to grammatical rules, you use semicolon (;) to separate complete sentences in the case there is not conjunction; also, the semicolon goes right before some transitions or conjunctions such as therefore, consequently, however, or similar. Additionally, in these cases, a semicolon is placed before the transition, and a comma is placed after it.
This implies in the sentence "Mr. Schultz is a good artist that is, he does work that I appreciate" it is recommended to insert a semicolon before "that is" or after the word "artist" considering "that is" acts as a transition, and therefore should be separated by a semicolon that goes before the transition and a comma after it.