If you have a heat gun you can warm the sheath by blowing hot air over it, (moving it around while doing so), and then while it's malleable insert the knife and remove several times until it's at the level you desire. Then leave the knife in place until the sheath cools.
You may be able to do this with the hot setting on a blow dryer as well but I've been using a heat gun when needed for adjusting kydex.