indica- yes, it will. Just not to its potential.

The rule for pots/dirt is 1 gallon dirt per 1 foot of finished plant height. But transplanting too soon is also not generally recommended by houseplant books; the plant just grows roots and that's it for a while. I like to let my plants get just a touch rootbound before transplanting them. It is also nice because then the whole root ball slides out in one clump rather than breaking up.
Avaoid planting in clay pots because the roots stick to the sides and it's really hard to transplant without damaging the roots.